Nominal rate and compounding frequency Effective rate (%)

? compounded monthly 10.5

what i did was

i = j/m > 0.105 = j / 12 which = 1.26

f = ( 1 + i ) ^ m F = ( 1 + 0.0126 ) ^ 12 - 1 = 16.21%

the book is giving the answer of 10.03% (Wondering)

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- Mar 23rd 2010, 01:57 PMdiehardmath4Effective interest rate
Nominal rate and compounding frequency Effective rate (%)

? compounded monthly 10.5

what i did was

i = j/m > 0.105 = j / 12 which = 1.26

f = ( 1 + i ) ^ m F = ( 1 + 0.0126 ) ^ 12 - 1 = 16.21%

the book is giving the answer of 10.03% (Wondering) - Mar 23rd 2010, 04:40 PMWilmer
- Mar 24th 2010, 08:32 AMdiehardmath4
Given:

*f*= 10.5% = 0.105 Find*i*and*j*,*m*= 12

*i*= (1 +*f*)^(1/*m*) - 1

*i*= (1 + 0.105)^(1/12) - 1 = 0.00836 = 0.836%

*i*=*j*/*m*=>*j*=*mi*= 12(0.836%) = 10.03% compounded monthly - Mar 24th 2010, 11:51 AMWilmer
Is that so?! Your 1st post said:

"Nominal rate and compounding frequency Effective rate (%)

? compounded monthly 10.5"

That sure seems to say 10.5 is compounding.

BUT IF you're looking for the rate that results in 10.5%

AFTER compounding, then 10.03% is correct.