# 7. The following formula is used to calculate the interest rate per period of a loan whenthe compounding period does not match the payment period.n/pr 11In this formula,r the rate per payment period, i the annual rate, n the num-ber of compounding periods per year, and p the number of payments per year.a. List the operations involved in evaluating this formula in the order they arecompleted.b. Use the formula to calculate r when i7.5%, n2, and p12. Write downintermediate calculations as accurately as possible, or use parentheses to enterthe entire expression into your calculator at once. Remember that percents mustbe written as decimals in these types of formulas. Write your final answer as apercent rounded to four decimal places.c. Use the formula to calculate the interest rate per period for a loan if there are4 payments per year, the annual rate is 8.25%, and there are 12 compoundingperiods per year. Write your final answer as aplaces

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110 views help_outlineImage Transcriptionclose7. The following formula is used to calculate the interest rate per period o f a loan when the compounding period does not match the payment period. n/p r 11 In this formula,r the rate per payment period, i the annual rate, n the num- ber of compounding periods per year, and p the number of payments per year. a. List the operations involved in evaluating this formula in the order they are completed. b. Use the formula to calculate r when i 7.5%, n 2, and p 12. Write down intermediate calculations as accurately as possible, or use parentheses to enter the entire expression into your calculator at once. Remember that percents must be written as decimals in these types of formulas. Write your final answer as a percent rounded to four decimal places. c. Use the formula to calculate the interest rate per period for a loan if there are 4 payments per year, the annual rate is 8.25%, and there are 12 compounding periods per year. Write your final answer as a places fullscreen
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Step 1

Given a formula used to calculate the interest rate per peiod of a loan when the compounding period does not match the payment period.

Where r = rate per payment period, i = annual rate, n  the number of compounding periods per year, p = number of payments per year.

Step 2

The order of operations in general follow parenthesis, exponents, multiplication, division, addition and subtraction from left to right.

1.  We compute what is inside the parenthesis. With in the parenthesis we compute i divided by n and then we do the addition of 1.

2. We compute the exponent next. To do that compute n/p first and use it to find the exponent (n/p) of value what we got inside of parenthesis.

3. Now we subtract 1 from the value which we got in second step. This would give us the final solution to find value of r.

Step 3

Given i = 7.5%, n = 2 and p = 12.

Now let us plug in the numbers in the formula mentioned and use the list of operations in order to solve for r, rate per payment period.

first solve inside the parenthesis and we get 1.0375.

Then solve for the exponent, fir...

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