Assume a bank offers an effective annual rate of 5.64%. If compounding is quarterly what is the APR? SHOW WORK
Effective annual rate = [(1+ APR/n]^n - 1
here,
Effective annual rate = 5.64%
=>0.0564
APR = to be found out
n = 4....(quarterly)...
now,
0.0564 = [(1+APR/4)^4 - 1
=>(1.0564)^1/4 = (1+APR/4)
=>1.01381123=1+ APR/4
=>0.01381123=APR/4
=>APR=0.05524492
=>APR=5.52%.
Assume a bank offers an effective annual rate of 5.64%. If compounding is quarterly what is...
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