Answer: 11.1004 % ( Approx)
Step-by-step explanation:
Since, effective interest rate, [tex]r = (1+ \frac{i}{n} )^n - 1[/tex]
Where, i is the stated interest rate,
And, n is the number of compound periods.
Here i = 10.5/100 = 0.105
And, Number of compound periods = 9
Thus, the effective interest rate of the loan,
[tex]r = (1+ \frac{0.105}{9} )^9 - 1[/tex]
⇒ [tex]r = 1.01166666667^9 - 1[/tex]
⇒ r = 1.11003575064 - 1=0.11003575064 [tex]\rightarrow[/tex] 11.003575064 % ≈ 11.004 %
