Effective rate of interest corresponding to a nominal rate 3% per annum payable half yearly is
To calculate the effective rate of interest corresponding to a nominal rate of 3% per annum payable half yearly, you can use the formula:
Effective Rate = (1 + (Nominal Rate / Number of Compounding Periods))^Number of Compounding Periods - 1
In this case, the nominal rate is 3% per annum and it is payable half yearly, so the number of compounding periods is 2.
Let's calculate the effective rate:
Effective Rate = (1 + (0.03 / 2))^2 - 1
Effective Rate = (1 + 0.015)^2 - 1
Effective Rate = (1.015)^2 - 1
Effective Rate = 1.030225 - 1
Effective Rate = 0.030225 or 3.0225%
Therefore, the effective rate of interest corresponding to a nominal rate of 3% per annum payable half yearly is approximately 3.0225%.
To determine the effective rate of interest corresponding to a nominal rate of 3% per annum payable half yearly, we will use the formula for compound interest:
Effective Interest Rate = (1 + (Nominal Interest Rate / Number of Compounding Periods))^Number of Compounding Periods - 1
In this case, the nominal rate is 3% per annum, which means it is divided by 2 to find the semi-annual rate. The number of compounding periods is 2, as the interest is paid half-yearly.
Plugging in the values, we get:
Effective Interest Rate = (1 + (0.03 / 2))^2 - 1
Calculating this expression, we find:
Effective Interest Rate = (1 + 0.015)^2 - 1
Effective Interest Rate = (1.015)^2 - 1
Effective Interest Rate = 1.030225 - 1
Effective Interest Rate = 0.030225 or 3.0225%
Therefore, the effective rate of interest corresponding to a nominal rate of 3% per annum payable half yearly is approximately 3.0225%.