dont understand this compound interest question
can some1 guide me through this
Find the effective rate of interest.
11.75% compounded monthly
The amount is stated in a nominal yearly rate, which is compounded 12 times a year..
The effective monthly rate is simply;
$\displaystyle i_{12}=\frac{0.1175}{12}=0.009791667$
So assuming you wanted the annual effective rate of interest, which is where the monthly effective rate is compounded 12 times;
$\displaystyle i=\left(1+\frac{0.1175}{12}\right)^{12}-1=12.4039\%$