Math (1 Viewer)

[jasminerulez]

if the interest rate for a loan is 6.3% p/a effective what would the equivalent nominal annual rate be compounding monthly?

 

[jimmysmith560]

Do you have the answer?

 

[jimmysmith560]

I think:

i = ( 1 + ( r / m ) )^m - 1
i = ( 1+ (0.063/12)^12 - 1
i = 6.5%

 

[Trebla]

If the interest of 100r% is compounded monthly then after 12 months each dollar grows by



Equate this to a growth of 6.8% (i.e. 1.068) and you can then solve for r.

 

[CM_Tutor]

If the interest of 100r% is compounded monthly then after 12 months each dollar grows by



Equate this to a growth of 6.8% (i.e. 1.068) and you can then solve for r.

Should this be equate to 6.3% (i.e. 1.063)?