Question

Find the effective rate per cent per annum equivalent to a nominal rate of 10% per annum interest payable half yearly.

Answer 1

effective rate of interest(r) = (1+i/n)whole power 'n' - 1
                                            =(1+0.1/2)²- 1
                                             =  0.1025
                                     i.e     = 10.25%