Homework Answers
5-8]
EAR = (1 + (APR/n))n - 1
where n = number of compounding periods per year
EAR for 1st choice = (1 + (9.2%/12))12 - 1 = 9.598%
EAR for 2nd choice = (1 + (9.2%/1))1 - 1 = 9.200%
EAR for 3rd choice = (1 + (8.3%/365))365 - 1 = 8.653%
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