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Percent Per Annum,  Form

Percent Per Annum, Form

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Instructions and help about Percent Per Annum,

in this lesson I'll show you how to calculate the effective rate in case you don't know the effective rate corresponding to a stated rate of interest or compounded M times per year is found using this formula our question reads find the effective rate for an account that pays 2.7 percent compounded and we have to find out monthly annually daily quarterly semi-annually and bimonthly so R represents in our case 2.7 percent we want to convert this as a decimal so we divide this number by 100 if we divide this by 100 we'll end up with zero point zero two seven so we just found our R we can start substituting that into our formula so the effective rate is equal to one plus zero point zero two seven divided by M which we'll put in in a moment this M which will leave blank minus one now M is determined by the words in case we're using compounding monthly your M value simply twelve because there are 12 months in a year so it's always relative to

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