An annuity written as a geometric series has r equal to 1.005 . Determine the annual interest rate for the annuity if the interest is compounded monthly

Question

mathmale · Answer

Basic equation, used where interest is compounded annually:$$A=P(1+r)^t$$

mathmale · Answer

where t is the number of years (number of compounding periods), and r is the annual interest rate.

If interest is compounded n times per year, then $$A=P(1+\frac{ r }{ n})^{nt}$$

mathmale · Answer

Now, in your math problem, the quantity inside the parentheses is 1.005.  Using the above formula, find the annual interest rate, r, remembering that n=12 (monthly compounding).

mathmale · Answer

Welcome to OpenStudy!

sally6sa · Answer

A=p(1+r/n) ^ nt this formula ?