If an investment of $4000 will grow to 6520 in 4 years with monthly compounding, the effective annual interest rate would be closest to: a. 11.21 b. 12.28 c. 12.99 d. 15.75 I’m looking at the answer key and it uses n=4, why isn’t n=48 since it’s monthly compounding?
asked earlier today. monthly compounding is a red herring, it’s asking for effective annual interest rate. Anyway, ((6520/4000)^(1/48))^12 = (6520/4000)^(1/4), so it makes no odds.