Business MathConverting to a tri-monthly interest rate

linapril

New member
If the APR is 3%, and I want to find the tri-monthly interest rate, is the correct way to find it:

(0.03+1)^(4/12)-1
?

MarkFL

Staff member
Taken from Wikipedia:

The formula for calculating the future value of an investment having an annual nominal interest rate is:

$\displaystyle A=P\left(1+\frac{r}{n} \right)^{nt}$

where:

• A = future value
• P = principal amount (initial investment)
• r = annual nominal interest rate (as a decimal, not in percentage)
• n = number of times the interest is compounded per year
• t = number of years

In your case r = 0.03 and n = 4.