A monthly interest rate of 1% is a compounded annual rate of :
A) 12.68%
B) 10.00%
C) 14.11%
D) 6.00%

Question

Quizplus · Accepted Answer

The compounded annual rate for a monthly interest rate of 1% is calculated using the formula for compound interest: (1 + r)^n - 1, where r is the monthly interest rate (expressed as a decimal), and n is the number of compounding periods in a year. Here, r = 0.01 and n = 12. Thus, the annual rate is (1 + 0.01)^12 - 1 = 0.1268 or 12.68%.

A Monthly Interest Rate of 1% Is a Compounded Annual