SOLUTION: A certficate of deposit has an annual rate of 6% compounded quarterly. Find the effective rate of interest.

Algebra ->  Customizable Word Problem Solvers  -> Finance -> SOLUTION: A certficate of deposit has an annual rate of 6% compounded quarterly. Find the effective rate of interest.      Log On

Ad: Over 600 Algebra Word Problems at edhelper.com


    

Question 171467: A certficate of deposit has an annual rate of 6% compounded quarterly. Find the effective rate of interest.
Answer by jojo14344(1513) About Me  (Show Source):
You can put this solution on YOUR website!

Remember: I=%281%2B%28i%2Fm%29%29%5Em, calculated per year
where ---> system%28I=EffectiveInterest%2Ci=interest=0.06%2Cm=Compounded=4%29
So, I=%281%2B%280.06%2F4%29%29%5E4-1
I=%281.015%29%5E4-1=1.0614-1=0.0614x100%
highlight%28I=6.14percent%29, Effective Interest
Thank you,
Jojo