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Expand PreviousNext Check 1 ptRetries 1Info Details Find the effective rate of interest of an inve

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Check 1 ptRetries 1Info Details






















Find the effective rate of interest of an investment that earns 2.17% compounded weekly. Round the effective rate to two decimal places.

NOMINAL=?

EFFECTIVE=?

C/P=?

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Answer #1

Nominal Rate (i) = 2.17$/52 = 0.04173% = 0.0004173

Effective Rate (r) = {(1+i)^n - 1}*100

= {(1 + 0.0004173)^52 -1} * 100

= {1.0004173^52 - 1}*100

= (1.02193253 - 1) * 100

Effective Rate = 2.19%

C/P =compounding period = Week

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