a) Computation of the effective annual interest rate:-

Effective annual interest rate = (1+Rate/n)^n-1

Here,

n = 2 periods (semiannual)

Effective annual interest rate = (1+10%/2)^2-1

= 1.1025 - 1

= 10.25%

 

b) Computation of the effective annual interest rate:-

Effective annual interest rate = (1+Rate/n)^n-1

Here,

n = 4 periods (quarterly)

Effective annual interest rate = (1+10%/4)^4-1

= 1.1038 - 1

= 10.38%

 

 

c) Computation of the effective annual interest rate:-

Effective annual interest rate = (1+Rate/n)^n-1

Here,

n = 12 periods (monthly)

Effective annual interest rate = (1+10%/12)^12-1

= 1.1047 - 1

= 10.47%

 

d) Computation of the effective annual interest rate:-

Effective annual interest rate = (e^rate) - 1

= (2.7183^10%) -1

= 1.1052 - 1

= 10.52%