Question

When calculating a loan’s effective interest rate, if the nominal rate is 8.5%, what value of i do you plug into your equation?
a.
8.5
b.
0.85
c.
0.085
d.
1.85

Answer 1

c. 0.085

Convert the percent to a decimal by dividing by 100: 8.5% = 8.5/100 = 0.085.