Engineering Board Exam Reviewer · Nominal and Effective Rate of Interest · medium
Find the nominal rate compounded quarterly that is equivalent to 9% compounded monthly.
- 9%
- 9.07%
- 9.38%
- 9.2%
Answer
B. 9.07%
Solution
Effective rate: ≤ft(1+0.09/12 )12-1=0.093807. Set ≤ft(1+r/4 )4=1.093807 r4=0.022669, so r=9.07%.
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