Thus, we may take R=R^*=0.1024. Using equation (5), we compute the true rate of interest to be 10.74 percent per annum.
Example of Problem B. Suppose a deposit of $200 is made at the end of every month into a tax-sheltered bank account paying interest compounded monthly. At what rate of interest should the money be invested if an accumulated amount of $200,000 is to be realized at the end of 25 years?