This is a really simple question but keeps tripping me up on

This is a really simple question but keeps tripping me up on problems. Say, I am given annual effective interest rate. I need to convert it to a monthly interest. Would I just simple take the annual interest and divide it by 12 or do I put it into the formula

Solution

Yes, for converting to a monthly interest for a period of 1 year, the formula you are using is correct.

But suppose it is for n number of years, then

(1 + i) = (1 + (j/12)) ⁽¹²ⁿ⁾