Civil Service Exam Reviewer · Simple Interest and Profit/Loss · hard
What is the effective annual interest rate of 12% compounded quarterly?
- 12%
- 15%
- 12.55%
- 12.68%
Answer
C. 12.55%
Solution
Effective rate = (1 + 0.12/4)⁴ − 1 = (1.03)⁴ − 1 = 12.55%.
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