What is the corresponding annual effective interest rate equivalent to an effective annual discount
rate of 5% p.a.?
Amount of Rs.100 for 1 year when compounded half-yearly} ;
=Rs.[100+(1+3100)2]=Rs.106.09=Rs. [100+(1+\frac {3} {100})^{2}] =Rs. 106.09=Rs.[100+(1+1003)2]=Rs.106.09
∴ Effective rate =(106.09−100)% =6.09%
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