Question

You have to purchase particulate emissions equipment for your fleet vehicles to meet new state regulations. This is a big expense to be phased in over the next 4 years. Your purchase of these pieces and their installation are financed over that time at 3.5% interest compounded quarterly. What is your actual interest rate at the compounding periods? A. 0.291% OB. 0.875% C.3.5% D. 0.75%

Answer 1

Solution:

Actual interest rate at compounding periods = 3.50% / 4 = 0.875%

Hence option B is correct.