Asked by Kelsey
If the APR is 7% with monthly compounding, compute the quarterly rate
Answers
Answered by
Reiny
let the quarterly rate be i
then (1+i)^4 = (1+.07/12)^12
take 4th root of both sides
1+i = 1.0058333..^4
1+i = 1.023538
i = .023538 or 2.3538% per quarter
times 4, gives us
9.4153% per annum compounded quarterly.
then (1+i)^4 = (1+.07/12)^12
take 4th root of both sides
1+i = 1.0058333..^4
1+i = 1.023538
i = .023538 or 2.3538% per quarter
times 4, gives us
9.4153% per annum compounded quarterly.
Answered by
Matt Hong
Monthly rate=0.07/12=0.005833
Quarterly rate=(1+Monthly rate)^3-1
=(1+0.005833)^3-1
=1.017601-1
=0.017601
=1.76%
Quarterly rate=(1+Monthly rate)^3-1
=(1+0.005833)^3-1
=1.017601-1
=0.017601
=1.76%
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