when calculating a loans effective rate, if the interest compounds every two months, what value of n do you…
when calculating a loans effective rate, if the interest compounds every two months, what value of n do you plug into your equation?\na. 2\nb. 0.167\nc. 6\nd. 60
Answer
Explanation:
Step1: Determine compound - ing frequency
The interest compounds every 2 months. There are 12 months in a year.
Step2: Calculate n
To find the number of compounding periods in a year ($n$), we divide the number of months in a year by the compounding interval in months. So, $n=\frac{12}{2}$. $n = 6$
Answer:
C. 6