Question

If the effective rate of interest is 12% per annum and the interest is compounded quarterly, the nominal

rate of interest per annum​

Answer 1

Answer:

11.49%

Step-by-step explanation:

{((1.12)^1/4)-1}*4 = ~ 11.49%

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Answer 2

Answer:

The nominal rate of interest per annum is 11.55%.

Step-by-step explanation:

Given:

If the effective rate of interest is 12% per annum and the interest is compounded quarterly,  

To find:

the nominal rate of interest per annum

Solution:

${(1 + \frac{r}{4})}^4$4 = 1 + 12%

${(1 + \frac{r}{4})^4$ = 1.12

Take log on both sides

log$({(1 + \frac{r}{4})^4$= log 1.12

4 log${(1 + \frac{r}{4})$ = 0.049

Log ${(1 + \frac{r}{4})$ = 0.012

$\frac{r}{4}$ = 0.028

r = 11.55

Result:

The nominal rate of interest per annum is 11.55%.

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