The effective rate of interest can be calculated using the formula for compound interest:

A = P (1 + r/n)^(nt)

Where:
A = the amount of money accumulated after n years, including interest.
P = principal amount (the initial amount of money)
r = annual nominal interest rate (decimal)
n = number of times that interest is compounded per year
t = time the money is invested for in years

Given:
P = 1 (it doesn't matter what value we use for P because we're looking for the ratio A/P)
r = 9.9% = 0.099 (converted to decimal)
n = 12 (since interest is compounded monthly)
t = 1 (since we're looking for the annual rate)

We can plug these values into the formula to find A:

A = 1 * (1 + 0.099/12)^(12*1)
A = (1 + 0.00825)^12
A = 1.1036 (as given in the question)

The effective rate of interest is then (A - 1) * 100% = 10.36%

So, the answer is (a) 10.36%.

Question

The effective rate of interest can be calculated using the formula for compound interest:

A = P (1 + r/n)^(nt)

Where:
A = the amount of money accumulated after n years, including interest.
P = principal amount (the initial amount of money)
r = annual nominal interest rate (decimal)
n = number of times that interest is compounded per year
t = time the money is invested for in years

Given:
P = 1 (it doesn't matter what value we use for P because we're looking for the ratio A/P)
r = 9.9% = 0.099 (converted to decimal)
n = 12 (since interest is compounded monthly)
t = 1 (since we're looking for the annual rate)

We can plug these values into the formula to find A:

A = 1 * (1 + 0.099/12)^(12*1)
A = (1 + 0.00825)^12
A = 1.1036 (as given in the question)

The effective rate of interest is then (A - 1) * 100% = 10.36%

So, the answer is (a) 10.36%.

Knowee AI · Accepted Answer

The effective rate of interest can be calculated using the formula for compound interest:

A = P (1 + r/n)^(nt)

Where:
A = the amount of money accumulated after n years, including interest.
P = principal amount (the initial amount of money)
r = annual nominal interest rate (decimal)
n = number of times that interest is compounded per year
t = time the money is invested for in years

Given:
P = 1 (it doesn't matter what value we use for P because we're looking for the ratio A/P)
r = 9.9% = 0.099 (converted to decimal)
n = 12 (since interest is compounded monthly)
t = 1 (since we're looking for the annual rate)

We can plug these values into the formula to find A:

A = 1 * (1 + 0.099/12)^(12*1)
A = (1 + 0.00825)^12
A = 1.1036 (as given in the question)

The effective rate of interest is then (A - 1) * 100% = 10.36%

So, the answer is (a) 10.36%.

Nominal rate of Interest 9.9% p.a. If Interest is compounded monthly. Whatwill be the effective rate of Interest? (Given    1240334000 = 1.1036)(a) 10.36 %(b) 9.36%(c) 11.36%(d) 9.9 %

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