Monday

October 20, 2014

October 20, 2014

Posted by **Ashton** on Tuesday, November 27, 2012 at 3:35pm.

(a) 7%/year, compounded daily

%

(b) 6%/year, compounded monthly

%

- math -
**angela**, Tuesday, November 27, 2012 at 4:02pm(1+r)^365 =(1.07)

1+r = 1.07^1/365

1+r =1.00018538

r = 0.0018538

r = .185% daily

(1+r)^12 = 1.06

1+r = (1.06)^1/12

1+r = 1.004867551

r = 0.004867551

r = .486% monthly

- math -
**Reiny**, Tuesday, November 27, 2012 at 5:17pmI disagree with angela's answer

When they ask for the effective rate, they are asking for the annual rate which is equivalent to the given compounded rate . This effective rate is often called APR

7% compounded dails

i = .07/365 = .00019178

let the effective rate be r

1+r = 1.00019178)^365

1+r = 1.0725

r = .0725

the effective rate is 7.25%

for the 2nd ...

i = .06/12 = .005

1+r = 1.005^12 = 1.06168

r = .06168 or appr 6.168%

**Answer this Question**

**Related Questions**

Math - Find the effective rate corresponding to the given nominal rate. (Round ...

Math - Find the effective rate corresponding to the given nominal rate. (Round ...

Finite Math - Find the effective rate corresponding to the given nominal rate. (...

math help plz! - DigiCom wants to drop the effective rate of interest on its ...

Finite Math - Find the effective rate of interest corresponding to a nominal ...

compounded interest - A bank offers a rate of 5.3% compounded semi-annually on ...

math - So I think I have got these down I just really want to double check the ...

math & finance - A bank offers a rate of 5.3% compounded semi-annually on its ...

algebra - The amount of money in an account with continuously compounded ...

algebra 2 - The amount of money in an account with continuously compounded ...