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October 21, 2014

October 21, 2014

Posted by **Sat** on Thursday, July 23, 2009 at 6:07pm.

- math(simple interest) -
**MathMate**, Thursday, July 23, 2009 at 7:39pmSince they are short term instruments, they pay simple interest.

$1000 invested in a 120 day GIC collects insterest of the amount

I1=1000*0.0575*120/365=$18.90411

$1000 invested in a 60 day GIC collects interest

I2=1000*0.0550*60/365=$9.041096

Therefore the amount needed for the next 60 days

= $18.90411 - $9.041096

= $9.86301

Effective interest rate

= 9.86301/60*365/1000

= 0.06

It will require 6% interest for the GIC for the next 60 days to catch up with the equivalent of the 120-day GIC.

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