In the solution of this question why the accumulation period has been assumed to be 7 year instead of a single year? Can you plzz explain it?
Only to avoid a more complicated formula. By taking the 7th route at the end they are converting back to an annual rate. You could accumulate one day at a time if you wanted to, using a term of 1/365 for each day. Then set this equal to (1+i)^(7/365) and you get the same formula without the 365s.
