If the effective interest is 12% per annum and the interest is compounded quarteely, the nominal interest per annum is? ​

Question

If the effective interest is 12% per annum and the interest is compounded quarteely, the nominal interest per annum is? ​

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Claire 4 days 2021-10-11T03:57:27+00:00 1 Answer 0 views 0

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    2021-10-11T03:58:51+00:00

    Answer:

    11.5% nominal interest rate …

    Step-by-step explanation:

    Let x be the nominal interest rate. Then:

    (1+x/4)^4=1+12%

    =1.12

    (1+x/4)^4=1.12

    Take the log of each side:

    log (1+x/4)^4=log 1.12

    4 log (1+x/4)=0.04921802267

    log (1+x/4)=0.0123045

    10^log (1+x/4)=10^0.0123045

    1+x/4=1.02873

    x/4=0.02873

    x=11.5% nominal interest rate …

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