Answer:
2.25%
Step-by-step explanation:
To calculate the interest rate for each compounding period, we need to consider the annual interest rate, the compounding frequency, and the total number of compounding periods.
In this scenario:
Annual interest rate: 27%
Compounding frequency: Monthly
Total number of compounding periods: 19 years (since the loan term is 19 years)
To find the interest rate for each compounding period, we divide the annual interest rate by the number of compounding periods in a year.
Number of compounding periods in a year = 12 (monthly compounding)
Interest rate per compounding period = Annual interest rate / Number of compounding periods in a year
Interest rate per compounding period = 27% / 12
Interest rate per compounding period = 0.27 / 12
Interest rate per compounding period = 0.0225 or 2.25%
Therefore, the interest rate for each compounding period, when the compounding is monthly, is 2.25%.