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A small doubt,
How to convert an annual rate to monthly assuming interest is on a compounding basis?
And how to convert a monthly rate to annual rate assuming interest is on a compounding basis?Suppose the monthly interest is r, and the annual interest rate is R
Then (1+r)^12 = 1+R
You use the same formula whether you know r and want R, or you know R and want r 🙂
(You can find examples of this in the free lectures on interest for Paper F2)
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