Find the APR, or stated rate, in each of the following cases. (Use 365 days in a

Question

Find the APR, or stated rate, in each of the following cases. (Use 365 days in a year. Enter rounded answers as directed, but do not use rounded numbers in intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).)

Find the APR, or stated rate, in each of the following cases. (Use 365 days in a year. Enter rounded answers as directed, but do not use rounded numbers in intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).)

Explanation / Answer

Solution - APR is the annual percentage rate or the Stated rate which gets calculated as per the Rate considering the period of calculation and compounding however and EAR ( Effective Annual rate ) is the actual rate of Interest calculated at the end of the year

To solve this we need to use the below formula to calculate the APR or the Stated Rate

APR = n x { (1 + EAR)power 1/n - 1} where n is the Period considering the Compounding frequency

Below is the calculation for Semiannually EAR of 15.25%

2 x [(1+15.25%)power1/2 - 1 ]

2 x [(1+.1525)power1/2 - 1 ]

2 x [(1.1525)power1/2 - 1 ]

2 x [1.073546 - 1 ]

2 x .073546

.147092

14.7%

Similarly for all others are calculated below -

Solution -

Stated Rate (APR) Number of Times Compounded Effective Rate (EAR) n n x [(1 + EAR)power1/n - 1 ]      Semiannually 15.25% 2 14.71%        Monthly 11.25% 12 10.71%        Weekly 9.75% 52 9.31%        Daily 7.75% 365 7.47%

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