Engineering Board Exam Reviewer · Nominal and Effective Rate of Interest · medium
Find the effective rate of interest equivalent to a nominal rate of 5% compounded quarterly.
- 5.09%
- 5.00%
- 5.25%
- 4.95%
Answer
A. 5.09%
Solution
ER=≤ft(1+0.05/4 )4-1=(1.0125)4-1 5.09%.
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