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August 29, 2014

August 29, 2014

Posted by **john** on Tuesday, September 19, 2006 at 11:06pm.

The formula for effective rate I found is (1+ i/n)^n - 1

where i is the annual rate as a decimal and n is the number of periods.

Here i=.03 so the effective rate is and n is 4 since there are 4 compounding periods.

(1+ .03/4)^4 - 1 = something you can do. If you want it as a percentage, multiply the number by 100 an use the % symbol.

BTW, are you the person who asked this question on Sunday?

"you have deposited 1000 dollars in your savings account with n annual interest rate of 4 percent compounded monthly. how much money are you going to have in your account after six months?"

"well theres another part of it if you could help me with.

"in the same problem find the effective interest rate after six months? "

You wanted the effective interest rate when i=.04 and the compounding was every 6 mos.

I only ask because I had to repost that one.

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