Question

For example, if the interest rate is 3% compounded semiannually, this is represented in thecompound interest formula as .03/2. If the interest rate is 7% ,

Answer 1

For 7% interest compounded quarterly, monthly, and annually, the representations would be
`\((7)/(4)\) percent, \((7)/(12)\) percent`, and 7% respectively.

In the compound interest formula, the interest rate per period is represented as a fraction of the annual interest rate. If the interest rate is 7%, it would be represented as follows for different compounding periods:

1. Quarterly (4 times a year):

`\[ (7\%)/(4) \]`

So, for quarterly compounding, the interest rate per period would be
`\((7)/(4)\)` percent.

2. Monthly (12 times a year):

`\[ (7\%)/(12) \]`

For monthly compounding, the interest rate per period would be
`\((7)/(12)\)` percent.

3. Annually (1 time a year):

`\[ (7\%)/(1) \]`

For annual compounding, the interest rate per period would be the full 7%.

Therefore, for 7% interest compounded quarterly, monthly, and annually, the representations would be
`\((7)/(4)\) percent, \((7)/(12)\) percent`, and 7% respectively.

The probable question may be:

For example, if the interest rate is 3% compounded semiannually, this is represented in the compound interest formula as .03/2.

If the interest rate is 7% , how would that percent be represented in the compound interest formula if it was compounded

quarterly?

monthly?

annually?

Write answer as a fraction as above.