Question

The annual interest rate of Paul's savings account is 7.2%,and simple interest is calculated monthly. What is the periodic interest rate of Paul's account?

A. 0.9%
B. 0.6%
C. 0.4%
D. 1.8%

Answer 1

I believe it C if that's not right let me know and I'll try to figure it out again

Answer 2

ANSWER: Option B) 0.6%

EXPLANATION: The Periodic Interest Rate is the interest rate charged on a loan over a specific period of time. Frequently, the banks or lenders quote annual interest rate but charge the interest on a periodic basis. So, the periodic interest rate is the annual interest rate divided by the number of compounding periods.

For Paul, the annual interest rate is 7.2% which is calculated every month i.e. 12 months,

So, 7.2% ÷ 12 months = 0.6%