Find the EAR in each of the following cases. (Do not round intermediate calculat

Question

Find the EAR in each of the following cases. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. Use 365 days in a year.) Number of Times Compounded Stated Rate (APR) Effective Rate (EAR) Quarterly Monthly Daily Semiannually 8.25% 17.75 14.25 10.25 References eBook & Resources Worksheet Learning Objective: 05-04 Explain haw interest rates are quoted (and misquoted) Section: 5.3 Comparing Rates: The Effect of Compounding Periods Difficulty: 1 Basic

Explanation / Answer

EAR=(1+APR/m)^m-1
where m=compounding periods

1.EAR=(1+0.0825/4)^4-1

=8.51%(Approx).

2.EAR=(1+0.1775/12)^12-1

=19.27%(Approx).

3.EAR=(1+0.1425/365)^365-1

=15.31%(Approx).

4.EAR=(1+0.1025/2)^2-1

=10.51%(Approx).

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.