When calculating a loan’s effective interest rate, if the nominal rate is 8.5%, what value of i do you plug into your equation? a. 8.5 b. 0.85 c. 0.085 d. 1.85

c. 0.085

Step-by-step explanation:

The effective rate is calculated by the formula

, where r is the effective annual rate

i is the nominal rate, and n is the number of compounding periods per year.

Now, given nominal interest rate i=8.5 %

To plug the value of i in the equation, we need to first convert it into decimal.

We get,

Thus, C is the right option.

step-by-step explanation: