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what rate of annual simple interest is equivalent to 9% per annum compounded semi-annually for 3 years

  • math -

    rate = (1.045)^2
    = 1.092025

    or 9.2025 %

    since you want the annual simple interest, the 3 years is irrelevant, all we have to do is look at a 1 year period

  • different interpretion - math -

    looked at it again....

    amount after 3 years at the compound interest
    = 1.045^6
    = 1.30226

    so interest on $1 is .30226

    using I = PRT
    .30226 = 1(r)(3)
    r = .10075

    the annual simple interest is 10.075%

    check:
    Assume we have $100

    amount after 3 years using the compound interest
    = 300(1.045)^6 = 130.23

    amount using simple interest of 10.075%
    = 100 + 100(.10075)(3) = 130.23

    YEAHHH

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