Answer: 0.1681 percentage point
Step-by-step explanation:
Here the stated interest rate = 8.145% = 0.08145
If the interest is calculated weekly,
In one year number of weeks= 52,
Thus, the effective interest rate in that case,
\(r_1 = (1+\frac{0.08145}{52})^{52} - 1\)
⇒ \(r_1 = 0.0847898451\)
Now, If the interest is calculated semiannually,
In one year number of half years in one year = 2
Thus, the effective interest in that case,
\(r_2 = (1+\frac{0.08145}{2})^{2} - 1\)
⇒ \(r_2 = 0.08310852562\)
Since, \(r_1-r_2 = 0.0847898451-0.0831851562=0.00168131947=0.168131947\% \approx 0.1681\%\)
Thus, Tiffany's effective interest rate is 0.1681 percentage point greater when the interest is calculated compound weekly than when the interest is calculated compound weekly.
