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Nature of problem: Calculation of Prepaid Interest on a Bank Bill when
given investment yield
Formula's involved:
Investment yield (IY) = [(FV - PP)/PP] * [365/M]
FV = face value in $
PP = purchase price in $
M = maturity of bill in days
365 represents days in year
Investment yield is shown as a %
Basically I need a formula for PP as a function of IY,M,FV. My algebra
is a little rusty but I'm sure it can be worked out as all the data
results in a IY of the correct rate (it's all ready given).
Below are 4 series of real data where the bank has calculated the
discount amount shown as the sum of (FV - PP) in terms of the
FV-PP,FV,M,IY.
data: (FV-PP,FV,M,IY)
Series 1 (23247.95,6593516,21,6.1500)
Series 2 (41038.81,7000000,35,6.1500)
Series 3 (6305.32,1075500,35,6.1500)
Series 4 (20642.01,4395980.82,28,6.1500)
Any help would be appreciated,
Cheers,
Hamish
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