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Jason decides to borrow money for a holiday. If a personal loan is taken over 4 years with equal quarterly repayments at 12% p.a. flat rate (simple interest), calculate the effective rate of interest.

22,588
32.588
42.588
43.588

Correct Answer: 22,588

Explanation:

Flat rate = 12%
n = 4 × 4
= 16

Effective rate =2n/(n+1) × flat rate

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