<PRE><B>Question 1098349</B>
number of quarters in a year is 4.
number of quarters in 6 years is 6 * 4 = 24


formula is f = p * (1+r)^n


f is the future value
p is the present value
r is the interest rate per time period (quarter of a year in this problem)
n is the number of time periods (quarters of a year in this problem).


formula becomes:


1959 = 1000 * (1+r)^24


divide both sides by 1000 and you get:


1959/1000 = (1+r)^24


take the 24th root of both sides of the equation to get:


(1959/1000)^(1/24) = 1+r


subtract 1 from both sides of the equation to get:


(1959/1000)^(1/24)-1 = r


solve for r to get r = .0284142874.


that&#39;s the interest rate per quarter.


the nominal annual interest rate is 4 * that = .1136571495 = 11.37% rounded to 2 decimal places


the effective annual interest rate is (1 + that)^4 - 1 = .118593795 = 11.86% rounded to 2 decimal places


not sure if you want the answer in percent interest rate or just interest rate.


answer i provided is in percent interest rate.


if you are interested in interest rate, then nominal is .11 rounded to 2 decimal places and effective is .12 rounded to 2 decimal places.





 

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