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?
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Compound interest lecture F2 - chapter 22
8y ago#1You 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?
8y ago#3Yes - quite possibly in any of the management or financial management papers.
(Which makes it important that you have a scientific calculator :-) )
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