The effective rate of interest per annum equivalent to a nominal interest rate of 13.20% per annum compounded monthly is 14.03%.
To calculate this, we need to use the formula for effective interest rate:
\(Effective Rate = (1 + (Nominal Rate/n))^n - 1\)
Where:
Nominal Rate = 13.20%
n = number of compounding periods per year (12 for monthly compounding)
Plugging in the values:
\(Effective Rate = (1 + (0.1320/12))^12 - 1\)
\(Effective Rate = (1 + 0.011)\)
\(Effective Rate = 1.0143\)
Multiply by 100 to get the percentage:
\(Effective Rate = 1.0143 * 100 = 14.03%\)
Therefore, the effective rate of interest per annum equivalent to a nominal interest rate of 13.20% per annum compounded monthly is 14.03%.
Find the effective rate of interest per annum equivalent to the nominal interest rate of 13.20% per annum compounded monthly.
14.03%
1.10%
1.58%
12.46%
0.011%
1 answer
1 answer