If the value of $1 is 1.082431 in one year at 8% compounded quarterly, what is the effective interest rate?

(a) 82.4% (b) 8% (c) 0.824% (d)8.24% (e) 824.31%

Eff. Rate = I/Po = (Pt - Po)/Po =

(1.082431-1) / 1 = 0.0824 = 8.24%.