The right answer will be both I and II
I. In the effective rate formula, n is equal to one.
II.The nominal rate is 7.918%.
What is compound interest?
Compound interest is the interest on a loan or deposit that accrues on both the initial principal and the accumulated interest from previous periods.
The formula for the compound interest is given as:
[tex]A=p(1+\dfrac{r}{n})^{nt}[/tex]
Here
A= amonut
P= principle
r=rate of interest
t=time period
n=for how much time compunded
Thus we can see in the question it is compounded annually so n = 1 and the rate is given as 7.918%
Thus the right answer will be both I and II
I. In the effective rate formula, n is equal to one.
II.The nominal rate is 7.918%.
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