Suppose a business borrows $100,000 for one year. The lender quotes a 6 percent annual interest rate that’s compounded semi-annually (twice a year). Determine the annual effective interest rate on the loan.
You may find the following form helpful.
|
Half-Year |
Half-Year Start of Period |
Interest at ?% |
Loan Balance at End of Period |
|
First |
$100,000.00 |
|
|
|
Second |
|
|
|