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Math Help - compound interest

  1. #1
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    compound interest

    dont understand this compound interest question
    can some1 guide me through this

    Find the effective rate of interest.
    11.75% compounded monthly
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  2. #2
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    The amount is stated in a nominal yearly rate, which is compounded 12 times a year..
    The effective monthly rate is simply;
    i_{12}=\frac{0.1175}{12}=0.009791667

    So assuming you wanted the annual effective rate of interest, which is where the monthly effective rate is compounded 12 times;
    i=\left(1+\frac{0.1175}{12}\right)^{12}-1=12.4039\%
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  3. #3
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    so what am i going to solve for
    what do i do from here
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  4. #4
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    Quote Originally Posted by math321 View Post
    so what am i going to solve for
    what do i do from here
    Nothing more to do: Robb gave you the answer: 11.75 cpd monthly = 12.4039 effective
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