An effective annual interest rate of 20 % is equivalent to a stated annual interest rate...

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Answer 1

Answer #1

Effective annual rate = (1 + annual interest/n)ⁿ - 1

0.2 = (1 + annual interest/4)⁴ - 1

1.2 = (1 + annual interest/4)⁴

1.046635 = 1 + annual interest/4

0.046635 = annual interest/4

annual interest = 0.187 or 18.7%

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Answer 2

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