Answer to Question #122645 in Financial Math for Ashmita

Question

III. Suppose that after making 50 payments, the interest rate changes to J2=9% p.a.:

A. Convert the interest rate J2=9% to J12 equivalent

Answer 1

$$J1=(1+{j2\over2})^2-1=(1+0.045)^2$$

$$=0.092025$$

$$J12=12((1+{0.092025\over1})^{1\over12}-1)$$

$$i=0.088357=8.8357\%$$