Question 1169921

A person pays interest on a loan semi-annually at a nominal rate of 16%. What is the effective rate of interest?
<pre>Effective interest rate formula: {{{(1 + i/m)^(mt) - 1}}}, where:
{{{i}}} = Annual Interest rate (16%, or .16, in this case)
{{{m}}} = Number of ANNUAL compounding periods (semi-annually, or 2, in this case)
{{{t}}} = Time, in years (1, in this case)
{{{(1 + i/m)^(mt) - 1}}} becomes: {{{highlight_green(matrix(1,5, (1 + .16/2)^(2 * 1) - 1, "=", .1664, "or", highlight("16.64%")))}}}