Question

When calculating a loan’s effective rate, if the interest compounds every two months, what value of n do you plug into your equation? a. 2 b. 0. 167 c. 6 d. 60.

Answer 1

The loan's effective rate and interest compound every two months then the value of n would be 6.

Given that,

When calculating a loan's effective rate, the interest compounds every two months.

We have to determine,

What value of n do you plug into your equation?

According to the question,

The calculation of compounded interest would be derived with the following formula:

$\rm P = \left (1+\dfrac{r}{n}\right)^{nt}$

In a year there are 12 months and when the interest rate is said to be compounded every two months then it implies that the number of months would be 6 months.

Then,

The value of n is,

$\rm 2n = 12\\\\n = \dfrac{12}{6}\\\\n = 6$

Hence, The loan's effective rate and interest compounds every two months then the value of n would be 6.

For more details, about Interest Rate refers to the link given below.

brainly.com/question/7967946