You have a car loan with a nominal rate of 7.75 percent. With interest charged m
ID: 2710185 • Letter: Y
Question
You have a car loan with a nominal rate of 7.75 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 7.75 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
EAR:
= (1+7.75%÷12)^12-1
= 8.03%
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