Effective vs Nominal Interest Rate (Grade 11)
Free printable Grade 11 General Mathematics worksheet on the effective annual interest rate versus the nominal rate, for interest compounded daily, monthly, quarterly or six-monthly. Aligned to ACARA Senior Secondary General Mathematics (ACMGM095).
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Grade 11 · Math worksheet
Name
Date
Math
Consumer Finance: Effective vs Nominal Interest Rate
The effective annual rate of a nominal rate compounded m times a year is (1 + i/m)^m - 1. Use it to state the true yearly rate and to compare accounts.
- 1.A nominal rate of 18% per annum is compounded quarterly. Find the effective annual interest rate, correct to 2 decimal places.
- 2.A nominal rate of 8% per annum is compounded six-monthly (twice a year). Find the effective annual interest rate, correct to 2 decimal places.
- 3.A nominal rate of 8% per annum is compounded daily. Find the effective annual interest rate, correct to 2 decimal places.
- 4.A nominal rate of 8% per annum is compounded quarterly. Find the effective annual interest rate, correct to 2 decimal places.
- 5.A nominal rate of 10% per annum is compounded daily. Find the effective annual interest rate, correct to 2 decimal places.
- 6.A nominal rate of 8% per annum is compounded daily. Find the effective annual interest rate, correct to 2 decimal places.
- 7.Account A pays 10% p.a. compounded six-monthly (twice a year). Account B pays 10% p.a. compounded daily. Which has the higher effective annual rate?
- 8.Account A pays 12% p.a. compounded quarterly. Account B pays 12% p.a. compounded daily. Which has the higher effective annual rate?
- 9.Account A pays 10% p.a. compounded six-monthly (twice a year). Account B pays 8% p.a. compounded monthly. Which has the higher effective annual rate?
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