If an 8 percent annual percentage rate is compounded quarterly, what is the effective annual rate? Using
Question:
If an 8 percent annual percentage rate is compounded quarterly, what is the effective annual rate?
Using Equation 4.7, we have:
Referring back to our original example where C0 = $1,000 and r = 10%, we can generate the following table:
Transcribed Image Text:
m 4 (1 + 5) - 1 = (1 + -08) - 1 = .0824, or 8.24% 4
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Corporate Finance
ISBN: 9781265533199
13th International Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
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