1- What is the effective semiannual interest rate of a loan that is 16% per month compounded monthly.? 2- What are the monthly payments on a $150000 interest only 20 Solution Answer 1: r = 16% T = 12 months CP = 1 month m = 6 months Effective semi annual rate = i = (1 + r/m)m - 1 = (1 + .16/6)6 - 1 = 0.1710 = 17.1%.