Answer :
The effective interest rate for Vijay's investment over the 5-year period is approximately equal to 0.0369 or 3.69%.
In this scenario, we have the following variables:
j represents the annual interest rate, which is 4% (0.04 in decimal form).
m represents the number of compounding periods per year, which is 12 (as interest is compounded quarterly).
i represents the periodic interest rate, which is calculated by dividing the annual interest rate by the number of compounding periods per year. In this case, i is equal to 0.04 divided by 60, resulting in 0.0006.
n represents the total number of compounding periods over the investment period, which is 5 years multiplied by 4 (since interest is compounded quarterly), giving us a value of 20.
To calculate the effective interest rate, we use the formula f = (1 + i)^m - 1. Plugging in the values, we have f = (1 + 0.0006)^60 - 1. Evaluating this expression gives us the effective interest rate over the 5-year period.
Know more about Compounding here:
https://brainly.com/question/14117795
#SPJ11
