Find the effective annual interest rate for the given nominal annual interest rate. Round your answers to the nearest
0.01%.
-3.9% compounded every minute (assume 365 days per year)

Question

Quizplus · Accepted Answer

The effective annual interest rate can be calculated using the formula $A = P(1 + \frac{r}{n})^{nt}$, where $A$ is the amount after time $t$, $P$ is the principal amount, $r$ is the nominal annual interest rate, $n$ is the number of compounding periods per year, and $t$ is the time in years. For an interest rate of 3.9% compounded every minute, we have $r = 0.039$, $n = 365 \times 24 \times 60$, and $t = 1$. The effective annual interest rate is calculated as $(1 + \frac{0.039}{365 \times 24 \times 60})^{365 \times 24 \times 60} - 1$, which rounds to approximately 3.98%.

Find the Effective Annual Interest Rate for the Given Nominal