How to Convert Monthly Interest to an Annual Rate
- 1). Convert the interest rate into a decimal by dividing by 100. For example, if the monthly interest rate is 1.4 percent, you get 0.014.
- 2). Add 1 to the result from step 1. For example, you would add 1 to 0.014 to get 1.014.
- 3). Raise the result from step 1 to the 12th power, because there are 12 periods per year. For example, you would raise 1.014 to the 12th to get 1.181559129. On a calculator, you would enter "1.014" then hit the exponent key, usually represented by "y^x" (the x will be in superscript), "x^y" (the y will be in superscript) or simply by "^," then enter "12" and push the equals button, denoted with "=."
- 4). Subtract 1 from the result from step 3. For example, you would subtract 1 from 1.181559129 to get 0.181559129.
- 5). Multiply the result from step 4 by 100 to find the annual interest rate expressed as a percent. For example, you would multiply 0.181559129 by 100 to find the annual rate to be about 18.16 percent.
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