Question 176415: A certificate of deposit mhas an annual rate of 6% compounded quarterly. Find the effective rate of interest. Show your work. Answer by stanbon(75887) (Show Source):
You can put this solution on YOUR website! A certificate of deposit has an annual rate of 6% compounded quarterly. Find the effective rate of interest.
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A(t) = P(1+(r/n))^(nt)
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Annual multiplier = (1+ (0.06)/4)^(4*1)
= (1+0.015)^4
= 1.06136
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Annual interest rate = 0.06136 or 6.136%
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Cheers,
Stan H.
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