The effective annual rate is 8.33%. we can calculate the effective nominal annual rate by using this formula; r = e∧i - 1 e is the constant = 2.718 i = compounded annual nominal rate = 8% = 0.08 r = 2.718∧ (0.08) - 1 = 1.0833 - 1 = 0.0833 = 0.0833 x 100 = 8.33%
