a quick lesson on calculating interest rates - less DIRT

NOAH

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810
I have a lump sum to invest max 18/24months but unfortunately I contcted a few banks etc and now inundated with calls, offering a rake of conflicting interet rates, eg 12, month, 18 month, 24 month and so on. But there must be a catch.

How do I do a quick comparison and maths was not my strong point so say I get 5.75% for 12 months at one and 8% for 18 months at another which is best? I reckon its the 5.75% but for calculating purposes is there a simple RR I can apply in case I am wrong?

noa-
 
Simple - ask them to quote you the equivalent Compound Annual Rate/CAR for all offers (which they are obliged to do anyway!) and then you can compare like with like. The gross CAR multiplied by 0.8 will give the net annual return.
 
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