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%
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Originally Posted by diehardmath4 Nominal i = j/m > 0.105 = j / 12 which = 1.26 Huh? .105 / 12 = .00875 1.00875^12 - 1 = .1102... so ~11.02%
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
Originally Posted by diehardmath4 Given: f = 10.5% = 0.105 Find i and j, m = 12 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.
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