The effective annual rate (EAR) for a loan with a stated APR of 10% compounded quarterly is closest to:a.9.65%.b.12.50%.c.15.00%d.10.00%.e.10.38%
Question
The effective annual rate (EAR) for a loan with a stated APR of 10% compounded quarterly is closest to:a.9.65%.b.12.50%.c.15.00%d.10.00%.e.10.38%
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Solution 1
The correct answer is e. 10.38%.
Here's the step-by-step calculation:
- The formula for the effective annual rate (EAR) when interest is compounded quarterly is EAR = (1 + r/n)^(nt) - 1, where r is the annual interest rate (in decimal form), n is the number of compounding periods per year, and t Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study prob
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
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