1)
There are 4 quarters in a year
Effective rate = (1 + APR/n)n - 1
Effective rate = (1 + 0.115/4)4 - 1
Effective rate = (1 + 0.02875)4 - 1
Effective rate = 1.120055 - 1
Effective rate = 0.1201 or 12.01%
2)
There are 12 months in a year
Effective rate = (1 + APR/n)n - 1
Effective rate = (1 + 0.145/12)12 - 1
Effective rate = (1 + 0.012083)12 - 1
Effective rate = 1.1550 - 1
Effective rate = 0.1550 or 15.50%
3)
There are 365 days in a year
Effective rate = (1 + APR/n)n - 1
Effective rate = (1 + 0.175/365)365 - 1
Effective rate = (1 + 0.000479)365 - 1
Effective rate = 1.1912 - 1
Effective rate = 0.1912 or 19.12%
3)
There are 2 semi annual periods in a year
Effective rate = (1 + APR/n)n - 1
Effective rate = (1 + 0.135/2)2 - 1
Effective rate = (1 + 0.0675)2 - 1
Effective rate = 1.1396 - 1
Effective rate = 0.1396 or 13.96%
SOLUTION :
Stated rate Number of times Effective rate
(APR) compounded (EAR)
11.50% Quarterly (1 + 0.1150/4)^4 - 1 = 0.1201 = 12.01%
14.50% Monthly (1 + 0.1450/12)^12 - 1 = 0.1550 = 15.50%
17.50% Daily (1 + 0.1750/365)^365 - 1 = 0.1912 = 19.12%
13.50% semiannually (1 + 0.1350/2)^2 - 1 = 0.1396 = 13.96%
Find the EAR in each of the following cases. (Do not round intermediate calculations and enter...
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1) 2) 3) 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) 11 .25% 14.75 17.25 13.25 Effective Rate (EAR) Quarterly Monthly Daily Semiannually
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Find the EAR in each of the following cases: (Assume 365 days in a year. Do not round intermediate calculations. 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) 8.1 % Quarterly % 17.1 Monthly 13.1 Daily 10.1 Infinite
10.00 points Find the EAR in each of the following cases. (Do not round Intermediate calculations and enter your answers rounded to 2 decimal places, ... 32.16. Use 365 days in a year) Effective Rate EAR) Stated Rate (APR) 12.75% 1325 18.75 14.75 Nur ber of Times Compounded Quarterly Monthly Semiannually References eBook & Resources Worksheet Learning Objective: 06-01 Explain how D uty: 1 Basic Section: B 3 Comparing Rates: The Elect of Compounding Paroda.
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