If the interest rate with semi-annual compounding is 8%, derive the value of an annuity that pays an investor £100 per month, with the first payment being immediate and then there being payments at the end of each of the next 12 months.

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Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.