General · Unit 4 · effective annual rate

Same advertised rate — different compounding paths

Same nominal rate, three schedules. Change principal and years — more frequent compounding pulls ahead further as the horizon grows.

Shared dollar scale (start → continuous ceiling at the horizon). Heights are comparable on purpose.

Advertised (nominal) annual rate

6%

Principal & horizon

$1
1

Scrub through time

0

At t = 0 everyone has P₀. Drag forward to see each compounding schedule apply its rate.

Working