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If an instalment plan quotes a monthly interest rate of 4%, the effective annual/yearly interest rate would be _____________.

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Martebi

There are different ways to pay interest rates. If an instalment plan quotes a monthly interest rate of 4%, the effective annual/yearly interest rate would be More than 48%.

Effective annual interest rate  

The effective annual interest rate is known as the real return gotten on savings account.

For example:  For investment B, this would be: 10.47% = (1 + (10% / 12)) ^ 12 - 1

In the case above,

(1 +4%)^12 -1 = 60.1% .Therefore, this is more than 48%

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If an instalment plan quotes a monthly interest rate of 4%, the effective annual/yearly interest rate would be _____________. 4% Between 4% and 48% 48% More than 48%

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