EFFECTIVE ANNUAL RATE EAR = An interest rate that reflects annualizing with compounding figured in....

Question

Question

EAR = An interest rate that reflects annualizing with compounding figured in.

EAR = (1 + APR/m)^m - 1, where APR = Annual Percentage Rate and

m = compounding frequency

A loan is offered with monthly payments and a 10% APR. What is the loan’s Effective Annual Rate:

EAR = ?

Answer 1

Answer #1

Answer - EAR = 10.47%

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Answer 2

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