The a answer is 125.219
the formulae is (1+i^n-1)×100
here i=r÷100

Effective Rate of Interest:
The effective rate of interest is the actual amount of interest earned or paid on an investment or loan over a specific period, taking into account the effect of compounding. It is the true rate of return or cost of borrowing, considering the compounding frequency.

Nominal Rate of Interest:
The nominal rate of interest is the stated rate of interest that is mentioned in a loan or investment agreement. It is the annual interest rate without considering the effect of compounding.

Compounding Frequency:
The compounding frequency refers to how often interest is compounded within a specific period. In this case, the nominal rate of interest of 7% is compounded monthly.

Calculation of Effective Rate of Interest:
To calculate the effective rate of interest corresponding to a nominal rate of interest compounded monthly, we can use the following formula:

Effective Rate = (1 + (Nominal Rate / n))^n - 1

Where:
- Nominal Rate is the stated rate of interest (7% in this case)
- n is the number of compounding periods in a year (12 for monthly compounding)

Substituting the values into the formula, we get:

Effective Rate = (1 + (0.07 / 12))^12 - 1

Using a calculator or spreadsheet, we can evaluate this expression to find the effective rate of interest.

Example Calculation:
(1 + (0.07 / 12))^12 = 1.0723

Effective Rate = 1.0723 - 1 = 0.0723 or 7.23%

Hence, the effective rate of interest corresponding to a nominal rate of interest of 7% compounded monthly is 7.23%.

Explanation of the Calculation:
The calculation accounts for the compounding effect by raising the expression (1 + (Nominal Rate / n)) to the power of n. By subtracting 1 from the result, we obtain the interest earned or paid over a year, expressed as a decimal. Multiplying this by 100 gives the effective rate of interest as a percentage.

Conclusion:
The effective rate of interest is a more accurate measure than the nominal rate of interest as it considers the compounding effect. Understanding the effective rate helps in comparing different investment or loan options and making informed financial decisions. In this example, the effective rate of interest is 7.23%, which means that over a year, the investment will grow by 7.23% due to compounding.