Interest rates. please help.?

a) I pay 5% p.a. interest for the first 6 months of a loan and 6.5% p.a. at an annual rate for the second 6 months.

how do I calculate the effective annual rate I paid?

and b) a bank offers me 18% interest on special deposits. the tax rate on interest income is 25% - but in the course of the year the price index rises from 325.6 to 370.7. what after tax, real rate of interest will I earn?

could someone please explain to me how this is done? id appreciate it. thanks.

Interest rates. please help.?mortgage loan

If the rate is from simple compunding, then an average of 5.75% is indicated. More likely, the interest is componded, and assuming monthly compounding so you have (1+05/12)^6 * (1+.065/12)^6 = 1.059, and the rate is 5.9%.

The 18% becomes 13.5% after tax, and this is eroded by inflation: 1.135/(370.7/325.6) = .9969, or -0.3% %26#039;real%26#039; interest rate.

Interest rates. please help.?

loan

a) I = prt

I = P(0.05)(1/2) + P(.065)(1/2) = 0.0575P

effective annual rate = 0.0575 or 5.75%

b) Net interest rate = (1 - .25) 0.18 = 0.135

Inflation = (370.7 - 325.6)/325.6 = 0.13851

so, your money is losing by 0.13851 - 0.135 = 0.00351 or 0.351%