Magnus Credit Corp. wants to earn an effective annual return on its consumer loa

Question

Magnus Credit Corp. wants to earn an effective annual return on its consumer loans of 16.25 percent per year. The bank uses daily compounding on its loans.

What interest rate is the bank required by law to report to potential borrowers? (Round your answer as directed, but do not use rounded numbers in intermediate calculations. Use 365 days in a year. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

What interest rate is the bank required by law to report to potential borrowers? (Round your answer as directed, but do not use rounded numbers in intermediate calculations. Use 365 days in a year. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

Explanation / Answer

Interest rate = ((1+r)^(1/365) - 1)*365

Interest rate = ((1+16.25%)^(1/365) -1)*365

Interest rate = 15.06%

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