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Hey John
I was just wondering if there is any way to calculate the APR backward? so for example, if we weren’t told the monthly rate in this example i.e 2% and we were just given the APR i.e 26.82%. Say we were only told this was compounded over a period 12 months, how would you figure out the monthly rate?
You would take the 12th root of 1.2682 and subtract 1.
So it would be exactly the same formula, but just used in reverse.
Brilliant, thanks a lot for the quick reply and quality of answer. Would this sort of thing be tested in any of F papers of P papers?
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