19.61%
19.44%
19.31%
19.72%
Answer is Right!
Answer is Wrong!
The effective rate corresponding to 18% compounded daily is 19.72%. This means that if you invest \$100 at 18% compounded daily, it will grow to \$119.72 in one year.
To calculate the effective rate, we can use the following formula:
$r_{effective} = \left(1 + \frac{r}{n}\right)^n – 1$
where $r$ is the annual interest rate and $n$ is the number of compounding periods per year.
In this case, $r = 18\%$ and $n = 360$. So, the effective rate is:
$r_{effective} = \left(1 + \frac{0.18}{360}\right)^{360} – 1 = 19.72\%$
The other options are incorrect because they do not take into account the fact that interest is compounded daily.