Answer:
The effective rate is R=5.04%
Step-by-step explanation:
Consider the provided information.
We need to find the effective rate of a $30000.
Interest Rate is 5% or 0.05.
Sometimes bankers calculate interest on a 360-day year for comfort.
Therefore, I can be calculated as:
I = Principal x Interest Rate x Frequency of a year
Principal = 30000, Interest Rate = 0.05 and Frequency of a year = 60÷360
![I=30,000\times0.05\times \frac{60}{360}](https://tex.z-dn.net/?f=I%3D30%2C000%5Ctimes0.05%5Ctimes%20%5Cfrac%7B60%7D%7B360%7D)
![I=1500\times \frac{1}{6}](https://tex.z-dn.net/?f=I%3D1500%5Ctimes%20%5Cfrac%7B1%7D%7B6%7D)
![I=250](https://tex.z-dn.net/?f=I%3D250)
Thus, cash in hand at the beginning of 60 days is:
p = 30,000 − 250 = 29750
The effective rate can be calculated as:
![R=\frac{I}{pt}](https://tex.z-dn.net/?f=R%3D%5Cfrac%7BI%7D%7Bpt%7D)
![R=\frac{250}{29,750\times \frac{60}{360}}](https://tex.z-dn.net/?f=R%3D%5Cfrac%7B250%7D%7B29%2C750%5Ctimes%20%5Cfrac%7B60%7D%7B360%7D%7D)
![R=\frac{250}{4958.3}](https://tex.z-dn.net/?f=R%3D%5Cfrac%7B250%7D%7B4958.3%7D)
![R=0.0504](https://tex.z-dn.net/?f=R%3D0.0504)
or
R=5.04%
Hence, the effective rate is R=5.04%