- #1
playboy
How do you find the annual effective rate of interest?
The question reads: You lend a friend $15 000 to be amortized by semiannual payments for 8 years, with interest at j2 = 9%. You deposit each payment in an account paying J12 = 7%. What annual effective rate of interest have you earned over the entire 8-year period?
Ans = 8.17%
Hmmm... i have absolutly no idea how to get the annuale effective rate of interest.
My TA showed, (in another question) that its something like (1 + i)^n = 1 + r
and solve for r?
Please help somebody
Thanks
The question reads: You lend a friend $15 000 to be amortized by semiannual payments for 8 years, with interest at j2 = 9%. You deposit each payment in an account paying J12 = 7%. What annual effective rate of interest have you earned over the entire 8-year period?
Ans = 8.17%
Hmmm... i have absolutly no idea how to get the annuale effective rate of interest.
My TA showed, (in another question) that its something like (1 + i)^n = 1 + r
and solve for r?
Please help somebody
Thanks