# Effective annual interest rate?



## osh1397 (Aug 13, 2021)

If a student makes monthly deposits of 1,200 into an account with a nominal annual interest rate of 4.5% compounded monthly, will he have enough after 5 years to purchase a $105,000 property in cash?

View attachment 23338


However, the answer used i = 4.5%/12 = 3.75%

Where is my mistake in using the formula?


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