Effective Interest Rate (Effective Yield)

This video shows how to derive the effective interest rate formula for compounded and continuous interest. It also provides two examples on how to calculate effective interest rate.

[hugoboy]

perfect! just what i've been looking for. thank you so much! However, i cant help but notice. Isnt the year multiplied to the interest rate (re) for the Simple Interest formula and not the exponent of (1+re)? So shouldnt it be P(1+ret)?

[mehmir]

simple interest formula is wrong here! should be P(1+r(e))t. you have it to the power t which makes it wrong. Here t is just 1 so it didnt make a difference overall. Thanks

[Raymondstu]

Why do you have an exponent T for simple interest formula or did you just mean that was the formula to find the annual simple interest rate? Also what is e I have never seen it used before, thanks.

[jackcastro]

Thanks for this very helpful for an assignment

[hardikpandya]

I hope the formula shown is no way related to simple interest. But, I could understand the concept from you only😇

[kimka]

Just wanted to ask, how come that there is an exponent t in the simple interest rate formula? :) 

[cherylmaloney]

thank you!! my prof. actually recommended this video and it helped tremendously!

[papagenoh]

Thank you very much, it is really helpful to me.

[indiechic]

thank you so much for your videos. great for exam revisions :)

[cwmasta]

Thanks for the help buddy, life saver!