Assuming i^(2) means your rate per period, which is twice a year, that would mean your rate = 8%.
You need to use an interest rate that is compounded with the same frequency as your regular payments.
To convert from a semiannual (twice a year) interest rate, to an equivalent monthly interest rate simply set up the following equation:
solving for :
A good way to check that you have calculated the new interest rate correctly is to compare it to your original one. Because monthly rates compound more often than semiannual rates, in order for the two to be equal as an annual rate, the monthly rate should be slightly less than the 8% rate used when compounding twice a year.
% which is slightly less than 8%
Remember that the 8% and 7.869836324% are the annual rates so divide by the number of time periods before you use them. The monthly interest rate you will be using for your loan repayments will be . Also, make sure to use your calculator and store the value you get for your interest rate - don't ever round it off.