Posted by **Viktor** on Thursday, March 27, 2008 at 6:12pm.

Interest of 12% per year compounded monthly is roughly equivalent to an interest rate of 12.68% per year compunded yearly when using the formula: A=p(1+r/n)^nt

If you solve the problem the two are equal; how can you derive 12.68% compounded yearly from 12% per year compounded monthly?