document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1204110>Question 1204110</A>: <I><SPAN STYLE=\"word-break: break-all;\"> A savings association pays 4% interest compounded quarterly. What is the effective<BR>\n" );
document.write( "annual interest rate? </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #840152 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=840152\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> growth rate per year = 4% / 100 = .04.<BR>\n" );
document.write( "growth rate per quarter = .04/4 = .01.<BR>\n" );
document.write( "growth factor per quarter = that + 1 = 1.01.<BR>\n" );
document.write( "effective growth factor per year = 1.01 ^ 4 = 1.04060401.<BR>\n" );
document.write( "effective growth rate per year = that - 1 = .04060401 * 100 = 4.060401% per year.<BR>\n" );
document.write( "that's the effective annual interest rate when the annual innterest rate is compounded quarterly.\r<BR>\n" );
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