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Confused with this question especially with what to do with the "expense charge"? Can anyone help?

A fund earns interest at the nominal rate of 8% compounded quarterly. At the end of each quarter, just after interest is credited, an expense charge equal to 0.4% of the fund is withdrawn. Determine the annual effective rate realized by the fund.

Thank you!!

Gregggg
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1 Answers1

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After $1$ quarter, an initial unit of money, after deduction of "expense charge" becomes $ 1.02\times\frac{99.6}{100}$

Raising the above to a power of $4$ yields a figure of $\approx 1.0652$

Thus the effective annual interest rate $\approx 6.52\%$

true blue anil
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