Question #192448

If the nominal interest rate per year is 16,5% per annum, ompounded at the end of every se ond month, then the ee tive interest rate is

[1] 18,00%.

[2] 16,18%.

[3] 14,53%.

[4] 16,68%.

[5] 17,68%


1
Expert's answer
2021-06-13T15:45:29-0400

i=nominal interest rate

n=compounding months

r=effective interest rate

r=(1+i/n)n1=(1+0.165/6)61=0.1768=17.68 %r=(1+i/n)^n-1=(1+0.165/6)^6-1=0.1768=17.68\ \%


Answer: 5. 17.68 %17.68\ \%

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