# Math

(a) To buy a Treasury bill (T-bill) that matures to \$10,000 in 12 months, you must pay \$9700. What rate does this earn?

(b) If the bank charges a fee of \$20 to buy a T-bill, what is the actual interest rate you earn?

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1. a. P = Po + Po*r*t.
P = \$10,000, Po = \$9700, t = 1 yr. r = Annual % rate = ?.

b. P = Po + Po*r*t. Po = \$9720, All other inputs remain the same. r = ?.

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