Answer:
a. 12% per year
Explanation:
Effective interest rate
r = (1 + i/n)^n - 1
r = effective interest rate
i = simple interest rate compounded monthly
n = number of compound intervals
12.68% = ((1+i/12)^12)-1)
1+0.1268 = ((1+i/12)^12)
1.1268^(1/12) =1+i/12
1.010 = 1+i/12
1.010-1 = i/12
0.010 x 12 = i
i = 0.12 = 12%
The effective interest rate is simply the interest rate charged yearly or compounded monthly. It is levied over the principal value of the borrowed amount. The borrower needs to pay the amount of interest over the principal amount until the maturity of the loan or borrowed amount.
The correct option is Option a. 12% per year.
[tex]\begin{aligned}\text{Effective Interest Rate}&=\left(\frac{1+\text{i}}{\text{n}} \right )^\text{n}-1\\12.68\%&=\left(\frac{1+\text{i}}{12} \right )^{12}-1\\1+0.1268&=\left(\frac{1+\text{i}}{12} \right )^{12}\\1.1268^ {\left(\frac{1}{12}\right )}&=\frac{1+\text{i}}{12}\\1.010-1&=\frac{\text{i}}{12}\\\text{i}&=0.12\;\text{or}\; 12\%\end{aligned}[/tex]
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https://brainly.com/question/13735414
