Very often, we are presented with a rate of interest expressed as monthly, annual, or as quarterly, and need to be able to compare it with another rate denominated in a different time period.
For example, interest rates on credit cards may be expressed as a monthly rate, though the yearly interest rate could be needed for comparison purposes. Bank loans are expressed as a percent per annum.
It is not appropriate, for example, to multiply a monthly rate by 12 to arrive at a yearly rate because interest earned during the months earns additional income compounded over the period. Therefore the compounded annual interest rate is greater than the sum of the 12 monthly rates.
It is assumed that investments start now and that incomes are paid at the end of the last day of the specified period.
Input the rate of interest in the appropriate box.