Convert an intrest rate of 3.5% per week is equivalent to an effective interest rate per quarter

Convert an intrest rate of 3.5% per week is equivalent to an effective interest rate per quarter

 

Answer:

Solution : Let us calculate effective interest per year by using the following formula :

r\ =\ \left(1+{\frac {i}{n}}\right)^{{n}}-1

Since the interest is compounded weekly ,therefore we have n =52 in a year

i=3.5%.

r = ( 1 +0.035/52)^52 -1

= 0.03560 compounded yearly.

r/4 =0.0089 effective interest per quater.

Asked on February 15, 2018 in economics.
Add Comment
0 Answer(s)
  • Votes
  • Oldest

Your Answer

By posting your answer, you agree to the privacy policy and terms of service.