INTEREST RATEForums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › INTEREST RATEThis topic has 3 replies, 2 voices, and was last updated 11 years ago by John Moffat.Viewing 4 posts - 1 through 4 (of 4 total)AuthorPosts March 1, 2014 at 9:18 am #161162 zafcynthiyaMemberTopics: 5Replies: 7☆2 investmentp offer interest of 5% per year compounded half yearly for 4 yearsQ offer one interest payment of 18%at the end of its 4 year life. what is annual effective interest rate?? offered by two investment?? (ans is.. p 5.06 and Q 4.22) r=( 1+i/n )^n-1p= (1+ 0.05/4)^4-1 *100 =5.09 am i right?can’t solve Q… please help March 1, 2014 at 10:10 am #161168 John MoffatKeymasterTopics: 57Replies: 54628☆☆☆☆☆For P, the interest is 2.5% every half year, and to the effective annual interest rate is 1.025^2 – 1 = 0.0506 or 5.06%For Q, if r is the annual rate, then (1+r)^4 = 1.18 So 1+r = fourth root of 1.18 = 1.0422 So r = 0.0422 or 4.22% March 1, 2014 at 10:22 am #161170 zafcynthiyaMemberTopics: 5Replies: 7☆thank you March 1, 2014 at 10:38 am #161174 John MoffatKeymasterTopics: 57Replies: 54628☆☆☆☆☆You are welcome AuthorPostsViewing 4 posts - 1 through 4 (of 4 total)You must be logged in to reply to this topic.Log In Username: Password: Keep me signed in Log In