The above equation can be written as for the above case year. This is not the case in compound interest. Using the prior example the effective rate would be 12683.
Earns 3 compounded monthly.
A P 1 r n n t A 1 000 000 1 06 12 12 5 A 1 000 000 1 0005 12 5 A 1 000 000 1005 60 A 1 348 85015. For a lender compound interest is advantageous as the total interest expense over the life of the loan will be greater. Hence for the cases when the rate is compounded half yearly we divide the rate by and multiply the time by before using the general formula for amount in case of compound interest. If this gives you scary high school flashbacks skip to the next section for the spreadsheet version.