Compound Interest Practice Test 6

Question : 9 of 9

Marks: +1, -0

The effective rate of interest corresponding to a nominal rate of 5% per annum payable at every quarter is:

Solution:

Let the sum of Rs 100 is compounded quarterly

⇒100(1+5/400)^4

=100×(81/80)^4=105.09

So, effective rate is 5.09%

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