Find the interest rate that is being compounded every three months which is equivalent to an effective annual rate of 4%.

Question

solomonzelman · Answer

$$A=P(1+\frac{r}{n})^{nt}$$A is the result after the investment
P is the initial investment
r is the interest rate
n is number of times that it's compound per year
t is the number of years

wolf1728 · Answer

Compounded Rate = [(1 + r/n)^n]-1 'r' is rate before compounding 'n' - number of compounding periods Compounded Rate = (1+.04/4)^4)-1 Compounded Rate = (1.01)^4 -1 Compounded Rate = 1.04060401 -1 Compounded Rate = .04060401 Compounded Rate = 4.060401 Sources: Formula http://1728.org/rate.htm Calculator http://1728.org/intrate.htm