Calculate the equivalent periodic interest rate per payment interval for the following annuity: Monthly payments discounted at 8.4% compounded semi-annually.
A) 0.69444%
B) 1.35337%
C) 1.27999%
D) 0.70000%
E) 0.68806%

Question

Quizplus · Accepted Answer

To find the equivalent monthly interest rate, first convert the semi-annual rate to an annual rate: (1 + 0.084/2)^2 - 1 = 0.084. Then, convert this annual rate to a monthly rate: (1 + 0.084)^(1/12) - 1 ≈ 0.68806%.

Calculate the Equivalent Periodic Interest Rate Per Payment Interval for the Following