BEC Question – Simple but can't figure out?

CPA Exam Review CPA Exam Forum Off-Topic & CPA Exam Misc OT: Off Topic BEC Question – Simple but can't figure out?

This topic contains 2 replies, has 2 voices, and was last updated by CPALady18 CPALady18 2 months ago.

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  • #2410806
    CPALady18
    CPALady18
    Participant

    There are multiple questions similar to this and I understand how they get the total answer, but I can't see to figure out how they are calculating the interest rate in days below. That's the only part I am stuck on. Can someone help?

    Maturity in euros = 100,000

    5% interest for 90 days = 1.0125

    Discounted proceeds = 98,765

    Exchange rate per euro = $ 1.25

    Dollar yield = $ 123,456

    #2412909

    Jimmy Dugan
    Participant

    It's 5% for 3 months. (5% divided by 12) X 3 = .0125, so the discount rate is 1.0125. Most of these questions, maybe all the ones I can remember, use the 360 day method, which may be what it throwing you off if you were trying to calculate per day interest based on 365/year.

    AUD - 95
    BEC - 87
    FAR - 84
    REG - 90
    You're killing me Smalls

     

    #2412960
    CPALady18
    CPALady18
    Participant

    @Jimmy Dugan Thank you!!

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