SOLUTION: Find the effective interest rate. Round to two decimal places when needed. Rate: 8% Compounded: Quarterly The effective rate is %.

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Question 980438: Find the effective interest rate. Round to two decimal places when needed.

Rate: 8% Compounded: Quarterly

The effective rate is %.
Answer by jim_thompson5910(35256) About Me  (Show Source):
You can put this solution on YOUR website!
Effective Rate = (1 + i/n)^n - 1

Effective Rate = (1 + 0.08/4)^4 - 1

Effective Rate = (1 + 0.02)^4 - 1

Effective Rate = (1.02)^4 - 1

Effective Rate = 1.08243216 - 1

Effective Rate = 0.08243216

Effective Rate = 8.243216%

The effective rate is 8.24%