Find the effective rate of interest if rate of interest is 40% p.a. and interest being compounded quarterly?
Explanation:
We know, P1+R/n100(n×t)= P1+Er100t
Since interest is compounded quarterly, n = 4 and t = 1, R = 40% and Er = effective rate of interest.
⇒ P1+40/41004= P1+Er1001
⇒ (1.1)4 = (1 + Er/100)
⇒ 1.4641 = 1 + Er/100
⇒ Er = 46.41%
Hence, option (b).
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