Answer and Explanation:
Dividing interest by 4: When interest rates are expressed on an annual basis but need to be calculated on a quarterly basis, dividing the interest rate by 4 ensures that the interest is appropriately distributed over the quarters. By dividing the annual interest rate by 4, you determine the interest for each quarter, reflecting the periodic nature of the calculation.
Using months instead of years: In many financial calculations, it is necessary to work with shorter time periods or make calculations on a monthly basis. By using months instead of years, the calculations become more precise and aligned with the actual time intervals involved. This is particularly relevant when dealing with monthly payments, interest accruals, or compounding periods. By dividing the annual interest rate by 12 (the number of months in a year), you obtain the monthly interest rate, enabling accurate calculations on a monthly basis.
In summary, dividing interest by 4 allows for proper distribution of quarterly interest, while using months instead of years ensures accuracy and consistency in financial calculations conducted on a monthly basis.