A car dealership is currently offering interest rates of 12% p.a. compounding quarterly. What is the effective quarterly rate?

The effective quarterly rate can be calculated using the formula for compound interest.

The formula is:

A = P (1 + r/n)^(nt)

Where: A = the amount of money accumulated after n years, including interest. P = the principal amount (the initial amount of money) r = annual interest rate (in decimal) n = number of times that interest is compounded per year t = time the money is invested for in years

In this case, we are looking for the effective quarterly rate, so we need to find the value of r/n.

Given: r = 12% p.a. = 0.12 (in decimal) n = 4 (since interest is compounded quarterly)

So, r/n = 0.12/4 = 0.03 or 3%

Therefore, the effective quarterly rate is 3%.