Ask Me Help Desk - A nominal interest rate of 19.4% per year, compounded monthly, is equivalent to

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A nominal interest rate of 19.4% per year, compounded monthly, is equivalent to

A nominal interest rate of 19.4% per year, compounded monthly, is equivalent to a continuous compounding rate of%

Interest of 19.4% per year compounded monthly means the interest rate per period is (19.4/12)%, and there are 12 periods per year:

Equivalent annual rate = $(1+ \frac {0.194}{12})^{12}$

Interest compounded continuously at an annual rate of i is $e^i$ .

So - solve for i given: $(1+ \frac {0.194}{12})^{12} = e^i$

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