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# Investment Yield (IR), Purchase Price, and Discount Rate (DR

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Ninety-one-day Treasury bills carry an investment return (IR) of 6.25 percent. What is their purchase price? What is their discount rate (DR)?

IR = (Par value - Purchase price / Purchase price) X (365 / Days to maturity)

DR =[(Par value - Purchase price) / 100] X (360 / Days to maturity)

NOTE: The DR is always less than IR.

USE AN EXCEL SPREADSHEET FOR RESPONSE. SHOW COMPLETE COMPUTATIONS FROM BEGINNING TO THE END AS TO HOW YOU ARRIVE AT THE ANSWERS.

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Ninety-one-day Treasury bills carry an investment return (IR) of 6.25 percent. What is their purchase price? What is their discount ...

#### Solution Summary

The solution shows how to calculate the Purchase Price, and Discount Rate (DR) for a treasury bill if we know the Investment Yield (IR).

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