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

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

EAR = (1+APR/ n )^n - 1

where n = number of times rate is compounded in a year

1) .14 = (1 +APR /2)^2 -1

    1+.14 = (1+APR /2)^2

   (1.14)^1/2   = 1+APR/2

   1.06771 = 1+APR/2

    1.06771 -1 = APR/2

   .06771 =APR/2

APR = .06771*2

         = .1354 OR 13.54%

2).09 = (1+APR/12)^12 - 1

   1.09 = (1+APR /12)^12

(1.09)^1/12 =(1+APR/12)

1.00721   = 1+APR/12

APR/ 2 = 1.00721 -1

APR= .00721*12

         = .0865 OR 8.65%

3) .08 = (1+ APR /52)^52 -1

(1.08)^ 1/52 = 1+APR /52

1.001481 =1+APR/52

APR/ 52 = 1.001481-1

APR = .001481 * 52

         = .077 OR 7.70%

4).13 = (1+APR/365)^365-1

(1.13)^1/365 = 1+APR/365

1.000335 =1+APR/365

APR /365 = 1.000335 -1

APR= .000335 *365

         = .1223 OR 12.23%

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