Have a table that will show the equivalent effective interest rates to some nominal interest rates with various compounding rates. Put the nominal interest rates of 2%, 3%, 4%, 5%, 6%, 7%, 8%, 9%, and 10% as the column headings in your table, and put the compound rates of annual, semi-annual, quarterly, monthly, bi-weekly, weekly, and daily as the row headings in your table. 

Use a single formula (without the use of Excel function EFFECT or NOMINAL) that you can drag to calculate the equivalent effective interest rates, to fill the table. What happens to the value of the equivalent effective interest rate when the number of times the nominal interest rate compounds grows larger? Paste your formula so that the formula is visible, for the effective interest rate that is equivalent to a nominal interest rate of 7%, compounding weekly, beneath the table column for 7%.

 

Answer rating: 100% (QA)

To calculate the equivalent effective interest rates we can use the formula Effective Interest Rate ... View the full answer