Question

What is the annually compounded rate of interest on an account with an APR of 10% and monthly compounding

Answer 1

Answer:

14.2%.

Explanation:

APR = 10 %

monthly = 10 / 12 = .8333%

effective annual with monthly compounding

= ( 1  + .008333 )¹² - 1

= 1.142-1 = .142

in percent terms it is 14.2%.