The annual interest rate of Jacques' savings account is 3.6%, and simple interest is calculated monthly. What is the periodic interest rate of Jacques' account?

A. 0.6%

B. 0.9%

C. 0.3%

D. 1.8%

We are given the effective annual interest which is 3.6% per year compounded yearly, therefore we cannot directly divide the answer by 12 if we want to obtain the effective monthly interest.

in order to obtain the effective monthly interest, we use the equation

i (yearly) = ([1 + i (monthly) ] ^12) - 1

therefore

i (monthly) = 0.94% ~ 0.9%