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#1 2013-02-19 08:31:08

vatso
Member
Registered: 2013-02-19
Posts: 5

Effective Annual Rate

If the effective weekly rate is 0.12%, the effective annual rate is? The correct answer is 6.43%. How you get this value? Thank you in advance!!!

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#2 2013-02-19 15:25:21

bobbym
Administrator
From: Bumpkinland
Registered: 2009-04-12
Posts: 87,249

Re: Effective Annual Rate

Hi vatso;

Experimentally, take a nice round figure of money like 100 dollars. Form the recurrence

with a(0) = 100 of course. Run it forward for 52 iterations, you get 106.43481. That is equal to an effective annual interest rate of 6.43 %.

Or use the formula

Last edited by bobbym (2013-02-19 15:28:20)


In mathematics, you don't understand things. You just get used to them.
Of course that result can be rigorously obtained, but who cares?
Combinatorics is Algebra and Algebra is Combinatorics.

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#3 2013-02-20 01:43:17

vatso
Member
Registered: 2013-02-19
Posts: 5

Re: Effective Annual Rate

Thank you Bobbym!!!!!!!!!

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#4 2013-02-20 01:54:17

bobbym
Administrator
From: Bumpkinland
Registered: 2009-04-12
Posts: 87,249

Re: Effective Annual Rate

Hi;

Come back if you need more.


In mathematics, you don't understand things. You just get used to them.
Of course that result can be rigorously obtained, but who cares?
Combinatorics is Algebra and Algebra is Combinatorics.

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