Final answer:
The effective annual rate for an APR of 17.00% compounded monthly is calculated as 18.0939%, which rounds to 18.09%. The closest option given is 18.11%, which is option c).
Step-by-step explanation:
The effective annual rate (EAR) for an APR of 17.00% compounded monthly can be calculated using the formula EAR = (1 + r/n)^(n*t) - 1, where r is the annual rate (in decimal form), n is the number of compounding periods per year, and t is the number of years. In this case, we have an APR of 17.00% (or 0.17 in decimal form) compounded monthly (n=12), and we want to calculate the equivalent EAR for 1 year (t=1).
Applying the values to the formula gives us EAR = (1 + 0.17/12)^(12*1) - 1. Simplifying, we get EAR = (1 + 0.0141667)^12 - 1, which further simplifies to EAR = 1.180939 - 1, or an EAR of 18.0939%. Therefore, the correct effective annual rate is 18.0939%, which we can round to 18.09% when giving a response.
Looking at the provided options, the closest to our calculated EAR is 18.11%, which is option c).