I didnt understand the formula used in the solution of question number 7.

for me, it seemed that it should be the case for a 4 year period.

Shouldn`t the interest be divided by 100 times n, in this case 4 and 2?

please help me clear this out.

Best regards,

Leo

if you mean the interest rate, according to the formula, the interest rate â€˜râ€™ should be first divided by 100 times n (100n) and then added to 1.

for the quarterly one, n = 4. so 8 divided by 400 equals 0.02 and add one to it, you will get 1.02 which has to be raised to the power of n *t ( n= 4 and t =1). So, (1.02)^4.

for twice a year, n becomes 2 and following the same process, you will get (1.04)^2.

In fact it was correct.

I think I messed up the math with the interest rates before.

Thanks!