Question

The first bank of lending lists the following apr for loans. Determine the apy, or effective interest rate, for a loan amount that is less than $20,000. Express your answer as a percentage rounded to the nearest hundredth of a percent, if necessary.

Answer 1

To determine the APY (Annual Percentage Yield) for a loan amount less than $20,000, specific APR details are needed. Please provide the APR, compounding frequency, and loan term for accurate calculations.

Step-by-step explanation:

The Annual Percentage Yield (APY) represents the total interest earned or paid on a financial product, including compound interest over a year. To calculate APY, the compounding frequency is crucial. The formula for APY is given by the expression
`\(APY = (1 + (r)/(n))^n - 1\),`where \(r\) is the nominal interest rate and \(n\) is the number of compounding periods per year. For a loan, the same formula applies, but the interest represents the cost to the borrower.

To provide a more accurate APY calculation, I would need specific details such as the Annual Percentage Rate (APR), the compounding frequency (e.g., monthly, quarterly), and the loan term. Once these details are provided, the formula can be applied to find the effective interest rate. Keep in mind that the loan amount itself doesn't directly impact the APY calculation; it's more about the interest rate, compounding frequency, and loan term.

In summary, the APY is a comprehensive measure that considers compounding to provide a more accurate representation of the true cost or earnings associated with a financial product. To determine the APY for a loan amount less than $20,000, we need specific details about the APR, compounding frequency, and loan term for precise calculations.