We are given:
Annual interest rate = 12% ; interest is calculated annually
Monthly interest rate = ?
Duration = 12 months
To obtain the monthly interest rate, we will find the quotient of the Annual interest rate by the Duration. We have:
[tex]\begin{gathered} I=\frac{12\text{ \%}}{12\text{ months}} \\ I=1\text{\%/month} \end{gathered}[/tex]Therefore, the monthly interest rate is 1% per month
