You have a car loan with a nominal rate of 6.60 percent. With interest charged m

Question

You have a car loan with a nominal rate of 6.60 percent. With interest charged monthly, what is the effective annual rate (EAR) on this loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

You have a car loan with a nominal rate of 6.60 percent. With interest charged monthly, what is the effective annual rate (EAR) on this loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Explanation / Answer

Effective annual rate (EAR) = (1 + r/m)^m - 1

= (1 + .066/12)^12 - 1

= 6.80%

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