Question: The number of compounding periods per year along with the yearly interest rate defines effective interest rate and period interest rate. Is there, and if there is, what number compounding periods per year cause the period interest rate and the effective interest rate to be equal if the yearly interest rate is the same?
You borrow 10,000 at 6 % per year compounded annually. You pay it off in three equal annual payments the first occurring at the end of the fourth year. Interest accrues during the entire period of the loan whether you make payments or not. What are the amounts of the yearly payments?