Read the question carefully and break it down into individual facts. Consider what is being asked by the question and then discard the facts that are irrelevant and presented purely as distractions. Focus on finding the variables used in the calculation of interest -- or PRT -- with P being the loan principal, R being the interest rate and T being the length of time. For example, if the question states that a business deposits $1,000 and then asks for its effective interest rate for the decade, the business' interest rates for each of those 10 years are important, but its annual interest rates in the 11th and 12th years can be safely ignored as distractions.
Build the log. In most cases, building the log is as simple as drawing up a number of rows equal to the number of calculations needed and four columns -- principal, interest rate, length of time and the interest calculated -- using those three figures. More complicated questions might need more columns for ease of comprehension and record-keeping. For example, the previous question requires those four columns and 10 rows, one row for each of the 10 years in the decade mentioned.
Fill in part of the log using the facts provided by the question. For example, if the question states that the business' annual interest rate was 2 percent in the first year, 4 percent in the second to fourth years and 8 percent in the remaining six years, the principal for the first year can be filled in as $1,000, the interest rate column can be filled in for all 10 years, and the length of time can be filled in as one for all 10 years.
Fill in the rest of the log by calculating missing numbers. For example, the business can use the $1,000 principal and 2 percent interest rate in the first year to calculate interest of $20 for that year. It then calculates principal for the second year as $1,020 and repeats the process for the other years until the entire log is filled in.
Use the information recorded on the log to answer the question. For example, the total amount of the deposit at the end of the decade should be around $1,820.72. That figure can be used to get an effective interest rate of about 82 percent on the deposit for the 10 years, calculated by deducting the original deposit from $1,820.72 and then dividing the difference by the original deposit.