Effective Interest Rate Calculations
Translated by
ScribdTranslationsEffective Interest Rate Calculations
Translated by
ScribdTranslationsEQUIVALENT RATES
1 - Calculate the effective quarterly interest rate, equivalent to an interest rate
nominal of 18.5% per year with monthly compounding?
R/= 4.7%
INM= 18.5%
n=4
12
1 + iN ( )−1
=( )
1 + 0.185 3−1
=( ) = 4.7
12
Calculate a quarterly effective interest rate, equivalent to a rate of
annual nominal interest of 29.8% with bimonthly compounding?
R/= 10.18%
INB = 29.8%
n=2
12
1 + iN ( )−1
=( )
1 + 0298 2−1
=( ) 10.18%
6
3 -Calculate a quarterly effective interest rate, equivalent to a rate of
annual nominal interest of 25% with monthly compounding?
R/= 8.6%
INM= 25%
n=3
12
1 + iN ( )−1
=( ) =
1 + 0,25 4−1
=( ) = 8.6%
12
4 -Calculate a quarterly effective interest rate, equivalent to a rate of
effective semiannual interest of 12%?
R/= 5.83%
IPS= 12%
n=4
( −1
)
=( 1 + IPS ) =
2
( )−1
=( 1 + 0.12 ) 4 = 5.83%
What effective annual rate is equivalent to a 32% nominal annual quarterly?
R/= 36%
INT= 32%
n= 4
−1
1 + iN
=( ) =
1 + 0,32 4−1
=( ) = 36%
4
What anticipated effective semiannual rate will convert $1,000,000 into $1,500,000?
three years?
R/= 1.13%
VP= 1,000,000
VF= 1.500.000
n = 36 months
=√( ) − 1=
36 1.500.000
= √ ( 1.000.000 ) − 1 = 1.13% =
What nominal annual rate for a two-month period is equivalent to 15% EA?
R/= 14.14%
iEA= 15%
n= 6
1
= (1 + iEA)( −) 1
=
1
= 6(1 + 0.15)( 6)−114.14%
What effective rate is equivalent to an annual rate of 36%, compounded?
quarterly?
R/= 7.99%
iEA= 36%
n=4
1
= (1 + iEA)( −) 1
=
1
= 4(1 + 0.36)( )−41
= 31.96%
0,3196
= 7.99%
4
What effective rate is equivalent to a nominal rate of 12% per year?
capitalizable semi-annually?
R/= 5.83%
iEA= 12%
n=2
1
= (1 + iEA)( −) 1
=
1
= 2(1 + 0.12)( )−21
= 11.66%
0,1166
= = 5.83%
2
At what effective rate does a nominal rate of 9% per year, compounded, equate?
quarterly
R/= 2.18%
iEA= 9%
n=4
1
= (1 + iEA)( −) 1
=
1
= 4(1 + 0.09)( )4−1
8.71%
0.0871
= = 2, 18%
4