what is the formula for the rate of interest of an investment compounded monthly?
Question
What is the formula for the rate of interest of an investment compounded monthly?
Solution
To calculate the rate of interest of an investment compounded monthly, you can use the formula for compound interest. The formula is:
A = P(1 + r/n)^(nt)
Where: A = the future value of the investment P = the principal amount (initial investment) r = the annual interest rate (in decimal form) n = the number of times interest is compounded per year t = the number of years
To find the rate of interest, you can rearrange the formula and solve for r:
r = (A/P)^(1/(nt)) - 1
By plugging in the values for A, P, n, and t, you can calculate the rate of interest for an investment compounded monthly.
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