The effective annual or yearly interest rate would be=30.56% which is Between 4% and 48%
Calculation of Annual Interest rate
The formula used to calculate annual Interest rate =
[tex](1+ \frac{i}{n} ) {}^{n} - 1[/tex]
where i= nominal interest rate = 4%
n= number of periods= 12 months
Annual Interest rate=
[tex](1 + \frac{4\%}{12} ) {}^{12} - 1[/tex]
= (1+0.333)^12 -1
= (1.333)^12-1
= 31.56 - 1
= 30.56%
Therefore, the effective annual or yearly interest rate would be= 30.56%
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