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The periodic interest rate is the interest rate applied per compounding period (day, month, quarter). It converts the annual rate to the rate used in payment calculations. Monthly rate = Annual rate / 12.

Trin-for-trin guide

  1. 1Monthly rate = Annual rate / 12
  2. 2Daily rate = Annual rate / 365 (or 360 for some loans)
  3. 3Quarterly rate = Annual rate / 4
  4. 4EAR = (1 + periodic rate)^periods − 1

Løste eksempler

Input
6% annual · monthly compounding
Resultat
Periodic rate = 6% / 12 = 0.5% per month

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