   Chapter 11.I, Problem 1RE ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# For the following investments, find the total number of compounding periods and the interest rate per period.Term of Investment Nominal Interest Compounding Rate per(Annual) Rate (%) Compounded Periods Period(%)______________________________________________________________________________3 years 13 annually 3 13____ ____

To determine

To calculate: The total number of compounding periods and the interest rate per period when an investment made for 3 years at 13% compounded annually.

Explanation

Given information:

An investment made for 3 years at 13% compounded annually.

Formula used:

Compounding period can be defined as the duration or length of time from one interest payment to the next. If an investment made for 4 years at 6% compounded annually (once per year) then it would have four compounding period which can be calculated by formula given below:

Compounding periods=Term of investments(years)×n

Here, n is the period per year.

The interest rate per period can be calculated by dividing the annual, or nominal, rate by the number of periods per year,

Interest rate per period=Nominal ratePeriod per year

Calculation:

Consider the investment made for 3 years at 13% compounded annually and solve as shown below,

Since, the variables

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