Question

How to calculate monthly interest rate

Answer 1

Explanation:

To calculate the monthly interest rate from an annual interest rate, divide the annual interest rate by 12 (the number of months in a year). Here's the formula:

`\[ \text{Monthly Interest Rate} = \frac{\text{Annual Interest Rate}}{12} \]`

For example, if the annual interest rate is 5%, the monthly interest rate would be:

`\[ \text{Monthly Interest Rate} = (0.05)/(12) = 0.0041667 \]`

Rounded to four decimal places, the monthly interest rate is approximately 0.0042, or 0.42%.