Answer:
1. What is the effective annual rate (EAR) of a mortgage that is advertised at 8.5% (APR) over the next twenty years and paid with weekly payments?
8.87%
2. What is the effective annual rate (EAR) of the mortgage at 8.5% APR with weekly payments? nothing% (Round to two decimal places.)
8.86%
Step-by-step explanation:
1.
APR = 8.5%
Weekly Payment
Number of years = 20
m = 52 x 20 = 1040
EAR = ( 1 + ( 0.085 / 1040 )^1040)-1
EAR = 0.0887
EAR = 8.87%
2.
APR = 8.5%
Weekly Payment
Number of years = 1
m = 52 x 1 = 52
EAR = ( 1 + ( 0.085 / 52 )^52 ) - 1
EAR = 0.0886
EAR = 8.86%