If you borrow $5,300 at $400 interest for one year, what is your effective inter

Question

If you borrow $5,300 at $400 interest for one year, what is your effective interest rate for the following payment plans? (Input your answers as a percent rounded to 2 decimal places.)

If you borrow $5,300 at $400 interest for one year, what is your effective interest rate for the following payment plans? (Input your answers as a percent rounded to 2 decimal places.)

        Effective Rate of Interest   a. Annual payment %   b. Semiannual payments %   c.Quarterly payments %   d. Monthly payments %

Explanation / Answer

EAR = (1+APR÷n)^n-1 n is number of compounding per year a Annual payment 7.55% (1+400/5300)^1-1 b Semi-annual payment 7.69% (1+(400/5300)/2)^2-1 c Quarterly payment 7.76% (1+(400/5300)/4)^4-1 d Monthly payment 7.81% (1+(400/5300)/12)^12-1

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