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Eckelberger Products Inc. makes high-speed recorders with high-speed scanning. The small company has been growing at an average rate of 70% per year for the past 4 years. The CEO asked you to convert the
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32 votes
Eckelberger Products Inc. makes high-speed recorders with high-speed scanning. The small company has been growing at an average rate of 70% per year for the past 4 years. The CEO asked you to convert the past growth rate into a semi-annually rate for its annual report. If the past growth rate was an effective rate, what was the effective growth rate semi-annually

User Brock Hensley
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10 votes

Answer: 30.4%

Step-by-step explanation:

The effective rate enables us see the rate of interest that is actually in operation due to being compounded over a certain period of time.

Effective rate can be calculated by the formula:

= (1 + annual rate) ^ (1 / number of compounding periods) - 1

= ( 1 + 70%)¹/² - 1

= 0.303840

= 30.4%

Compounding period is 2 as this is semi-annual.

User Abdullah BaMusa
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