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Q50 BPP Exam Kit or FMC Dec 2005 amended:
Part bi) what is the formula used to calculate annual percentage rate.
Thank you very much.
If the rate per period is r, and the annual rate is R, then:
(1 + R) = (1+r)^n (where n is the number of periods)
(In this question, it is 5% every six months, so r = 0.05 and n = 2 (because there are 2 times six months in a year).)
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