Find the effective annual interest rate r of the given annual interest rate. Round your answer to the nearest 0.01%. 9% compounded quarterly
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Find the effective annual interest rate r of the given annual interest rate.
Round your answer to the nearest 0.01%. 9% compounded quarterly
Using 1000 as starting point. You can use a different number if you want.
Quarter Calculation of Interest Total in Account at End of Qtr
1 1/4 • 0.09 • 1000.00 = 22.50 1022.50
2 1/4 • 0.09 • 1022.50 = 23.01 1045.51
3 1/4 • 0.09 • 1045.51 = 23.52 1069.03
4 1/4 • 0.09 • 1069.03 = 24.05 1093.08
Total interest 1093.08 – 1000.00 = 93.08
Effective rate 93.08 / 1000 = 0.09308 = 9.308%
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