hi guys zo Li here from Bright Young brains in this video we are working on financial mathematics specifically how to use the effective rate interest formula this question says the following when John purchased his car the bank offered him a loan at a nominal rate of 133% perom compounded monthly what was the effective annual interest rate that he was required to pay so this kind of equation literally just needs you to make use of the effective rate interest formula so this is what the effective rate interest formula looks like there we go so with an equation like this one we know that our value for I Norm is equal to 13% and then our value for M because it's compounded Monthly our value for M has to be equal to 12 so we're literally just going to throw these values into calculator now because this is 13% you can write it as 13 over 100 or you can write it as 0.13 depending on whichever one you prefer so we have to make this the subject of the formula also and then we can put everything into the formula there we go so all this into our calculator I usually firstly write to four decimal places and then afterwards just multiply by 100 so we have a percentage there we ago moving on to the next question so obviously videos in this playlist you can click all there