SOLUTION: I saw similar problems (Stanbon (64282))on the site and when I followed the steps being used I did not come close to what was expected for an answer. could someone explain what I

Algebra ->  Percentages: Solvers, Trainers, Word Problems and pie charts -> SOLUTION: I saw similar problems (Stanbon (64282))on the site and when I followed the steps being used I did not come close to what was expected for an answer. could someone explain what I       Log On


   

Question 893044: I saw similar problems (Stanbon (64282))on the site and when I followed the steps being used I did not come close to what was expected for an answer. could someone explain what I did wrong so that I can do the other problems based on your guidance.
Find the effective rate corresponding to nominal rate 6% I year compounded monthly. Round the answers to the nearest hundredth of percent.
A) 6.538%
B) 5.858%
C) 6.598%
D) 6.168%

Answer by stanbon(75887) About Me  (Show Source):
You can put this solution on YOUR website!
Find the effective rate corresponding to nominal rate 6% I year compounded monthly. Round the answers to the nearest hundredth of percent.
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A(t) = P(1+(r/n))^(nt)
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Your Problem::
A(t) = P(1+(0.06/12))^(12*1)
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Effective rate = (1+0.005)^12 - 1
= 0.061678
= 6.168%
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Cheers,
Stan H.
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A) 6.538%
B) 5.858%
C) 6.598%
D) 6.168%