Consumer arithmetic

CPT 705 views 2 replies

udumalpet

90 Points Joined April 2012

The effective rate of interest corresponding a nominal rate of 7% p.a convertible quarterly is

a)7%

b)7.5%

c)7.10%

d)none of these

Replies (2)

1460 Points Joined August 2009

E = (1+I)^n - 1

=(1+0.07/4)^4*n-1

=(0.2675)^1/4*4-1

=0.2675 - 1

=0.7

=70%

student-cpt

427 Points Joined April 2012

(1+reff) = (1+r/n)^n

1+reff = (1+ 7/400)^4 = (1.0175)^4 = 1.071859

implies reff = 0.071859 = 7.1859%

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