Answer:
Nominal annual rate of interest(r) = 2.5% (Approx)
Explanation:
Given:
Present value (P) = $1,200
Future value (F) = $1,618.62.
Number of year = 1year = 12 months
Find:
Nominal annual rate of interest(r)
Computation:
Nominal annual rate of interest(r) = [tex]\sqrt[12]{\frac{1,618.62}{1,200} }-1[/tex]
Nominal annual rate of interest(r) = [tex]\sqrt[12]{1.34885}-1[/tex]
Nominal annual rate of interest(r) = 0.02525
Nominal annual rate of interest(r) = 2.5% (Approx)
