The Mexican state of Chiapas opted to invest in a reading program for pupils in primary schools. The answer is $58,627 for the eternal comparable annual cost at a 10% annual interest rate.
When the benefits of compounding over time are taken into account, an effective annual interest rate represents the true return on a savings account or any other investment that pays interest. It also displays the actual percentage rate of interest paid on any other debt, including loans and credit card debt. The yearly equivalent rate or effective interest rate are other names for it (AER). Because it takes compounding effects into account, the effective annual interest rate is the real interest rate on an investment or loan.
The rate increases as the compounding periods get more frequent. Advertisements for loans or savings accounts may include both the nominal interest rate and the effective annual interest rate.
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