Question

Find the EAR in each of the following cases (Use 365 days a year. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Stated Rate (APR)	Number of Times Compounded	Effective Rate (EAR)
8.9	Quarterly		%
17.9	Monthly
13.9	Daily
10.9	Infinite

Answer 1

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

=[(1+0.089/4)^4]-1

=9.20%(Approx).

2.EAR=[(1+APR/m)^m]-1
where m=compounding periods

=[(1+0.179/12)^12]-1

=19.44%(Approx).

3.EAR=[(1+APR/m)^m]-1
where m=compounding periods

=[(1+0.139/365)^365]-1

=14.91%(Approx).

4.EAR=(e)^APR-1

where e=2.71828

=[(2.71828)^0.109]-1

=11.52%(Approx).