business math

Question

If the annual rate is 2.5% and there are 12 periods per year, what is the rate per period?

Answer 1

the underlying formula that you want to use on this one is

rate per period = annual rate / number of periods per year

in this case that means taking

rate per period = 0.025 / 12 = 0.0020833 = 0.20833% per period

Answer 2

2.5%/12 periods = interest rate per period