标题: monthly compounding [打印本页]

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作者: irlfaan7    时间: 2011-7-11 18:23     标题: monthly compounding

if an investment of $4000 will grow to $6250 in four years with monthly compounding, the effective annual interest rate will be closest to:

a. 11.2%
b. 12.3%
c. 13.0%


FV=6250 PV=-4000 N=48 i=cpt

then i multply this by 12 to get 12.3 but they say the answer is 13....

can someone explain this? thanks

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作者: agulani    时间: 2011-7-11 18:23

i believe for the effective rate you have to plug in your answer to this equation. (1+answer from TVM)^12 - 1.

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作者: soddy1979    时间: 2011-7-11 18:23

solved this one like 10 mins back! make sure you hit % after you get the answer from TVM.

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