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Let i = annual rate of interest.

Then i' = ((1+i )^(1/12))-1

Where i' = monthly rate of interest

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Let i = annual rate of interest.

Then i' = ((1+i )^(1/12))-1

Where i' = monthly rate of interest

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If not compounded monthly, a monthly interest rate is simply 1/12 of the annual rate.

Things do get complicated, though if the interest is compounded monthly. An annual interest rate of R% is equivalent to a monthly rate of

100*[(1 + R/100)^(1/12) - 1] %

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The rate is 1600/8000 = 1/5 = 20%

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1 3/4%

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1

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