Question

Find the effective rate of interest for 16% compounded continuously.The effective rate of interest is %(Round to three decimal places as needed.)

Answer 1

Given the interest as 16% the effective rate can be seen below.

Step-by-step explanation

The formula can be seen below.

`\begin{gathered} effective\text{ rate\lparen compounded continuously\rparen=}e^i-1 \\ =e^{(16)/(100)}-1=e^{(4)/(25)}-1=0.17351=17.351\text{\%} \end{gathered}`

Answer: 17.351%