You agree to make 24 deposits of $500 at the beginning of each month into a bank account. At the end of the 24thmonth, you will have $13,200 in your account. If the bank compounds interest monthly, what nominal annual interest rate will you be earning? a. 7.62% b. 8.00% c. 8.40% d. 9.05% e. 9.26%

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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.