Question 3
If money is invested for 3 years, the per annum simple interest rate equivalent to a nominal rate of 12.5%p.a compounding monthly is (as a percentage rounded to three decimal places; don’t use % sign):
we can fin the rate using following formula
Amount x Simple interest Rate X 3 = Amountx(1+r%)^n - Amount
here r = rate of interest = 12%/12 = 1%
n = no of compounding period = 3*12 = 36
Amount x Simple interest Rate X 3 = Amountx(1+1%)^36 -
Amount
Amount x Simple interest Rate X 3 = Amount(1.01)^36- Amount
Amount x Simple interest Rate X 3 = 1.43(Amount)- Amount
Amount x Simple interest Rate X 3 = 0.43Amount
Simple Interest rate = 0.43Amount/3 Amount
Simple interest rate = 0.14333
i.e 14.33%
Question 3 If money is invested for 3 years, the per annum simple interest rate equivalent...
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