Question

What is the equivalent simple interest (yield) for an investment of 8% compounded quarterly? Round to 2 decimal places

Answer 1

let us take the period for compounding and simple interest for 1 year.  It may change for for more number of years.

r2 = 8%      r1 = ?

Simple interest = P r1 * 1 =  C I = P (1 + r2 / 4)⁴ - P
    
               P r1   = P (1 + 8 /4*100)⁴ - P
 
                  r1 = 1 .02⁴ - 1 = (1.02² + 1) (1.02²  -1)   ≈ 2.0404 * 0.0404
                             =  0.8243

equivalent simple interest = 8.24 %