Answer:
7.602729%
Explanation:
Given:
Rate of interest = 7.35% = 7.35/100 = 0.0735
Effective Annual Rate (Monthly) = ?
Rate of interest(monthly) = 0.0735 / 12 = 0.006125
n = 1 year x 12 = 12 month
Computation:
Effective Annual Rate (Monthly) = [tex](1+r)^n-1[/tex]
Effective Annual Rate (Monthly) = [tex][ (1 + 0.006125 )^{12} - 1 ] \times 100 \\[/tex]
[tex][ (1 .006125 )^{12} - 1 ] \times 100 \\[ 1.07602729 - 1 ] \times 100\\ [0.07602729 ] \times 100 \\7.602729[/tex]
Effective Annual Rate (Monthly) = 7.602729%
