When using the compounded amount formulas, you must state the interest rate in decimal form. To calculate this, you divide the Annual interest rate by the number of compounding periods per year.

Question

When using the compounded amount formulas, you must state the interest rate in decimal form. To calculate this, you divide the Annual interest rate by the number of compounding periods per year.​

Quizplus · Accepted Answer

To use the compounded amount formulas correctly, the interest rate must be expressed as a decimal rather than a percentage, and it is divided by the number of compounding periods per year to adjust for the frequency of compounding.

When Using the Compounded Amount Formulas, You Must State the Interest