if 6% interest is compounded monthly, the periodic rate (i) is:
if 6% interest is compounded monthly, the periodic rate (i) is:
Answer
Explanation:
Step1: Recall the formula for periodic rate
The periodic rate $i$ is calculated by dividing the annual interest rate $r$ by the number of compounding periods per year $n$.
Step2: Identify the values
The annual interest rate $r = 6%=0.06$. Since it is compounded monthly, the number of compounding periods per year $n = 12$.
Step3: Calculate the periodic rate
$i=\frac{r}{n}=\frac{0.06}{12}=0.005$
Answer:
$0.005$