136k views
0 votes
What effective annual rate can a bank earn on an APR OF 11.5 percent, compounded monthly?

User Fourat
by
6.5k points

1 Answer

1 vote

...

SOLUTION


\begin{gathered} Effective\text{ Annual Rate=\lparen1+}(i)/(n)\text{\rparen}^n-1 \\ i=stated\text{ annual rate=11.5\%=0.115} \\ n=number\text{ of compounded periods=12} \end{gathered}

Substitution and simplification;


Effective\text{ Annual Rate=\lparen1+}(0.115)/(12)\text{\rparen}^(12)-1=12.126\text{ \% }

User Ardiya
by
6.5k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.