interest

This topic has 5 replies, 2 voices, and was last updated 3 years ago by John Moffat.

Viewing 6 posts - 1 through 6 (of 6 total)

Author

Posts
September 6, 2019 at 10:29 am #545245
iza1
- Topics: 114
- Replies: 112
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 #545306
John Moffat
Keymaster
- Topics: 57
- Replies: 50627
No 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 #545401
iza1
- Topics: 114
- Replies: 112
but 2 is in % right ?
so when we divide it is .02/52

What 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= 4.408

but answer says 8.67
September 7, 2019 at 9:21 am #545414
John Moffat
Keymaster
- Topics: 57
- Replies: 50627
2% 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 #545418
iza1
- Topics: 114
- Replies: 112
i 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 right

What 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= 4.408

but answer says 8.67
September 7, 2019 at 3:25 pm #545469
John Moffat
Keymaster
- Topics: 57
- Replies: 50627
If the interest is 2.1% charged every three months, then 1 + R = 1.021^4

Again, have you watched my free lectures on interest?
Author

Posts

Viewing 6 posts - 1 through 6 (of 6 total)

You must be logged in to reply to this topic.