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A loan is offered with monthly payments and a 15.5 percent APR. What is the loan's effective annual rate (EAR)
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A loan is offered with monthly payments and a 15.5 percent APR. What is the loan's effective annual rate (EAR)

User Russell Seymour
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1 Answer

4 votes

Answer:

16.63%

Step-by-step explanation:

effective annual rate (EAR) = (1 + periodic interest rates)^m - 1

M = number of compounding

periodic interest rates = 15.5 /12 = 1.29%

1.0129^12 - 1 = 0.166269 = 16.63%

User YoavKlein
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4.0k points
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