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


Please select the best answer from the choices provided

A
B
C
D

Answer 1

C

You use the decimal form of the nominal rate, 8.5% = 0.085.