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19 December, 05:04

How to find periodic interest rate

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  1. 19 December, 05:33
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    Explanation:A periodic interest rate is a rate charged on a loan or rate realised on an investment over a stated period of time.

    Interest rates are usually stated on an annual basis but compounds more frequently than annually in most cases.

    Periodic Interest rate is calculated as the annual interest rate divided by the number of compounding periods.

    A very good example of a periodic interest rate is interest on mortgage. The mortgage loan is payable over a long period of time say 20 years and the interest rates is compounded monthly to enable the lender pay on a monthly basis.
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