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If the annual interest rate is 6%, and interest is compounded monthly, the interest rate per period is: ____%

For a 4-year loan, at 8% compounded quarterly, the number of interest periods is: _____

Respuesta :

Answer:

1) 0.5 %

2) 16

Step-by-step explanation:

Since, a year = 12 months,

1 month = [tex]\frac{1}{12}[/tex] year,

1) If the interest is compounded monthly,

Then, the rate per period =  [tex]\frac{\text{Annual rate}}{12}[/tex]

Given, annual rate = 6%,

So, the rate per period = [tex]\frac{6}{12}[/tex] = 0.5%,

2) 1 year = 4 quarters,

If the loan is of 4 year and it is compounded quarterly,

Then, the number of compounding periods = number of years × 4

= 4 × 4

= 16