Effective rate of interest for a sum of money compounded quarterly is 12.55%.What is the nominal rate? Without using log table
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Let r be the nominal interest rate. Then:
(1+r/4)^4=1+12%
=1.12
(1+r/4)^4=1.12
Take the log of each side:
log (1+r/4)^4=log 1.12
4 log (1+r/4)=0.04921802267
log (1+r/4)=0.0123045
10^log (1+r/4)=10^0.0123045
1+r/4=1.02873
r/4=0.02873
r=11.5% nominal interest rate ………….
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