BUSINESS ADMINISTRATION
BUSINESS MATHEMATICS
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
0.125
|
|
|
0.0125
|
|
|
0.25
|
|
|
0.15
|
Detailed explanation-1: -First, divide the nominal rate by the number of compounding periods. The result is the periodic rate. Now add this number to 1 and take the sum by the power of the number of compounding interest rates.
Detailed explanation-2: -This means the nominal annual interest rate is 6%, interest is compounded each month (12 times per year) with the rate of 6/12 = 0.005 per month, and you receive the interest at the end of each month.
Detailed explanation-3: -A daily periodic rate is calculated by dividing the APR by 365 days (or 360 for some companies); a monthly periodic rate is calculated by dividing the APR by 12 months; a quarterly periodic rate is calculated by dividing the APR by four.
Detailed explanation-4: -How do I calculate my daily periodic rate? Your daily periodic interest can be calculated by dividing your Annual Percentage Rate (APR) by the number of days that are taken into account for the year, this is typically 360 or 365 days depending on your credit card issuer.