You plan to apply for a loan from Bank of America. The nominal annual interest rate for this loan is 15.31 percent, comp...

Question

Question

You plan to apply for a loan from Bank of America. The nominal annual interest rate for this loan is 15.31 percent, comp...

You plan to apply for a loan from Bank of America. The nominal annual interest rate for this loan is 15.31 percent, compounded daily (with a 365-day year). What is the effective annual rate, or EAR (annual percentage yield), of this loan?

Please show work. I don't under how to use the ^ in the formula/equation.

business finance

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

EAR . 1 i =stated annual interest rate number f compounding periods

$EAR = (1 + \frac{0.1531}{365})^{365} - 1$

EAR = 1.1654 - 1

EAR = 0.1654

EAR = 16.54%

Add a comment

Answer 2

Similar Homework Help Questions

You plan to apply for a loan from Bank of America. The nominal annual interest rate...

You plan to apply for a loan from Bank of America. The nominal annual interest rate for this loan is 13.30 percent, compounded daily (with a 365-day year). What is the effective annual rate, or EAR (annual percentage yield), of this loan? Round the answer to two decimal places in percentage form.
You plan to apply for a loan from Bank of America. The nominal annual interest rate...

You plan to apply for a loan from Bank of America. The nominal annual interest rate for this loan is 18.85 percent, compounded daily (with a 365-day year). What is the effective annual rate, or EAR (annual percentage yield), of this loan? Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)
You are considering an investment that has a nominal annual interest rate of 7.54 percent, compounded...

You are considering an investment that has a nominal annual interest rate of 7.54 percent, compounded semiannually. Therefore, the effective annual rate, or EAR (annual percentage yield) is_ Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)

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?
1. A bank pays a quoted annual (simple) interest rate of 8 percent. However, it pays...

1. A bank pays a quoted annual (simple) interest rate of 8 percent. However, it pays interest (compounds) on a daily basis using a 365-day year. What is the effective annual rate of return? Show details of the EAR formula. 2. You have just taken out a 30-year mortgage on your new home for $120,000. This mortgage is to be repaid in 360 equal monthly installments. If the stated (simple) annual interest rate is 14.75 percent, what is the amount...
You have a car loan with a nominal rate of 4.95 percent. With interest charged monthly,...

You have a car loan with a nominal rate of 4.95 percent. With interest charged monthly, what is the effective annual rate (EAR) on this loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

An investor can invest money with a particular bank and earn a stated interest rate of...

An investor can invest money with a particular bank and earn a stated interest rate of 6.60%; however, interest will be compounded quarterly. What are the nominal, periodic, and effective interest rates for this investment opportunity? Interest Rates Nominal rate 6.60% Periodic rate Effective annual rate 1.65% 6.77% Rahul needs a loan and is speaking to several lending agencies about the interest rates they would charge and the terms they offer. He particularly likes his local bank because he is...
Assume that nominal effective interest i(12) = .03. Find ? a) Annual effective interest rate i...

Assume that nominal effective interest i(12) = .03. Find ? a) Annual effective interest rate i ? b) Monthly effective interest rate j ? c) Nominal interest rate i(52) compounded weekly. ? d) Nominal discount rate d(365) compounded daily.
ou have a car loan with a nominal rate of 9.54 percent. With interest charged monthly,...

ou have a car loan with a nominal rate of 9.54 percent. With interest charged monthly, what is the effective annual rate (EAR) on this loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

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 %

You plan to apply for a loan from Bank of America. The nominal annual interest rate for this loan is 15.31 percent, comp...

Homework Answers

Add Answer to:
You plan to apply for a loan from Bank of America. The nominal annual interest rate for this loan is 15.31 percent, comp...

Post as a guest

Earn Coins