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- This topic has 5 replies, 2 voices, and was last updated 4 years ago by John Moffat.
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- September 6, 2019 at 10:29 am #545245
hi
if nominal interest is compounded weekly as 2% what is apr ?r = 2/52 weeks =0.038 %
1 + R = (1 +.00038 )^52
R = 1. 99%
is this right ??September 6, 2019 at 3:55 pm #545306No it is not right.
2/52 = 0.038 (not 0.038%)
Therefore 1 + R = (1 + 0.038)^52
September 7, 2019 at 7:40 am #545401but 2 is in % right ?
so when we divide it is .02/52What is the effective annual rate of interest of 2.1% that is compounded every 3 months?
Also in this question then it must be
r = 2.1/4 =.525
1+R = 1.525^ 4
R= 4.408but answer says 8.67
September 7, 2019 at 9:21 am #5454142% is the same as 0.02, not 0.02%.
What I wrote before is correct.
Do watch my free lectures on interest 🙂
September 7, 2019 at 9:38 am #545418i did sir. i cant seem to understand the nominal to effective rate
nominal rate is when interest rate is expressed annually but calculated less than a year rightWhat is the effective annual rate of interest of 2.1% that is compounded every 3 months?
Also in this question then it must be
r = 2.1/4 =.525
1+R = 1.525^ 4
R= 4.408but answer says 8.67
September 7, 2019 at 3:25 pm #545469If the interest is 2.1% charged every three months, then 1 + R = 1.021^4
Again, have you watched my free lectures on interest?
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