2. What nominal annual interest rate compounded monthly is equivalent to an effective annual interest rate...

Question

Question

2. What nominal annual interest rate compounded monthly is equivalent to an effective annual interest rate of 8% per year for

Answer 1

✔ Recommended Answer

Answer #1

Calculating EAR for the whole period,

EAR = [(1.08)¹⁰(1 + 0.05/365)³⁶⁵⁰]^1/20 - 1

EAR = 6.554%

APR(monthly) = 12[(1.06554)^1/12 - 1]

APR(monthly) = 6.365%

Answer 2

Similar Homework Help Questions

4. Find the effective bimonthly interest rate equivalent to: (a) nominal annual interest of 9%, compounded...

4. Find the effective bimonthly interest rate equivalent to: (a) nominal annual interest of 9%, compounded 6 times per year; (b) nominal annual discount of 6%, compounded quarterly; (c) 1/2 nominal annual interest of 8%, compounded continuously.
2.30 For a 15 percent effective annual interest rate, what is the nominal interest rate if...

2.30 For a 15 percent effective annual interest rate, what is the nominal interest rate if (a) Interest is compounded monthly? (b) Interest is compounded daily (assume 365 days per year)? (c) Interest is compounded continuously?
3) What is the effective monthly interest rate for a loan with a 12% nominal annual...

3) What is the effective monthly interest rate for a loan with a 12% nominal annual interest rate if the loan is compounded (a) semi-annually, (b) monthly, or (c) continuously? (to 5 decimal places)

What is the effective annual interest rate equivalent of a nominal rate given as 12% compounded...

What is the effective annual interest rate equivalent of a nominal rate given as 12% compounded quarterly?
its all one big question. Find the equivalent interest rates to the given nominal interest rates....

its all one big question. Find the equivalent interest rates to the given nominal interest rates. a. Nominal interest rate compounded quarterly that is equivalent to an effective interest rate of 7.5% 0.00 % Round to two decimal places b. Nominal interest rate compounded monthly that is equivalent to 8% compounded quarterly 0.00 % Round to two decimal places c. Nominal interest rate compounded monthly that is equivalent to 6.5% compounded annually 0.00 % Round to two decimal places Brian...
The annual effective interest rate corresponds to the nominal rate of 10% compounded monthly Deal A:...

The annual effective interest rate corresponds to the nominal rate of 10% compounded monthly Deal A: You loan me $4000 today and I pay you back $2000 in 1 year, and $4000 in 2 years. Deal B: I loan you $2000 today and another $4000 in 1 year and you pay me $X in 2 years. What does $X have to be for you to be indifferent between these two deals?

Find the effective annual interest rate (EAR) for each of the following: 4.00 percent compounded quarterly....

Find the effective annual interest rate (EAR) for each of the following: 4.00 percent compounded quarterly. (Round answer to 2 decimal places, e.g. 15.25%.) Effective annual rate % 4.80 percent compounded monthly. (Round answer to 2 decimal places, e.g. 15.25%.) Effective annual rate% 6.50 percent compounded semiannually. (Round answer to 2 decimal places, e.g. 15.25%.) Effective Annual Rate % 4.50 percent compounded daily. (Round answer to 2 decimal places, e.g. 15.25%. Use 365 days for calculation.) Effective Annual Rate %
What effective interest rate per week, compounded continuously, is equivalent to a nominal rate of 10%...

What effective interest rate per week, compounded continuously, is equivalent to a nominal rate of 10% per year? The effective interest rate per week is ______%. It wasn't 10.52%, 10.517%, 10.506%, 10.51%, 10.37%.
What effective interest rate per year, compounded continuously, is equivalent to a nominal rate of 15%...

What effective interest rate per year, compounded continuously, is equivalent to a nominal rate of 15% per year? Express your answer as a %.

What effective interest rate per two-months, compounded continuously, is equivalent to a nominal rate of 10%...

What effective interest rate per two-months, compounded continuously, is equivalent to a nominal rate of 10% per year? The effective interest rate per two-months is _______ %