Question

HW18: Problem 10 Previous Problem Problem List Next Problem (4 points) Find the effective rate of interest for a) 11% compounded monthly Answer b) 6% compounded semiannually Answer Note: You can earn partial credit on this problem. Preview My Answers Submit Answers You have attempted this problem 0 times You have unlimited attempts remaining Page generated at 11/21/2019 at 06:19pm EST WeBWorK 1996-2018| theme: math4 ww_version: WeBWorK-2.14 | pg_version PG-2.14| The WeBWorK Project

Answer 1

EAR . 1 i =stated annual interest rate number f compounding periods

a) 11% compounded monthly

$EAR = (1 + \frac{0.11}{12})^{12} - 1$

EAR = 1.1157 - 1

EAR = 0.1157

EAR = 11.57%

b) 6% compounded semi-annually

$EAR = (1 + \frac{0.06}{2})^{2} - 1$

EAR = 1.0609 - 1

EAR = 0.0609

EAR = 6.09%