Question

Suppose you can borrow money at 8.6% per year (APR) compounded semiannually or 8.4 per year (APR) compounded monthly. Could it do with Finance calculator format?

Calculate the effective annual rates. 9.00% and 8.64% (Do not round intermediate calculations) Enter your answer as a percent rounded to 2 decimal places)

Answer #1

Calculation done on BAII PLUS PROFESSIONAL Calculator format:

For 8.6 per year (APR) compounded semi-annually:

Step 1: Select "2ND" button(i.e shift button) on the calculator.

Step2: Select numeric two "2"(shift mode ICONV) button.Then "NOM=" will appear on calculator screen. Input 8.6 and "Enter" button.

Step3: Click on upper arrow button. Now C/Y comes. Input 2 (for semi annual compounding) and "Enter" button.

Step4: Again click on upper arrow button. Now EFF( Effective annual rate) comes. Click on "CPT" button.

So, result of EFF will appear as 8.78 i.e Effective annual rate will be 8.78%

For 8.4 per year (APR) compounded monthly:

Step 1: Select "2ND" button(i.e shift button) on the calculator.

Step2: Select numeric two "2"(shift mode ICONV) button.Then "NOM=" will appear on calculator screen. Input 8.4 and "Enter" button.

Step3: Click on upper arrow button. Now C/Y comes. Input 12 (for monthly compounding) and "Enter" button.

Step4: Again click on upper arrow button. Now EFF( Effective annual rate) comes. Click on "CPT" button.

So, result of EFF will appear as 8.73 i.e Effective annual rate will be 8.73%

Now, as in the question, for APR 9% and 8.64% , compounding not mentioned so.taking both of them as semi annually compounding first:

Following above semi annual compounding step,

for 9% APR, EFF will be 9.20%

for 8.64% APR, EFF will be 8.83%

Following above monthly compounding step,

for 9% APR, EFF will be 9.38%

for 8.64% APR, EFF will be 8.99%

Find the APR, or stated rate, in each of the following cases.
(Do not round intermediate calculations and enter your
answers as a percent rounded to 2 decimal places, e.g., 32.16. Use
365 days in a year.)
Stated Rate (APR)
Number of Times
Compounded
Effective Rate (EAR)
%
Semiannually
14.50
%
%
Monthly
10.50
%
Weekly
10.50
%
Daily
8.50

Find the APR, or stated rate, in each of the following cases.
(Do not round intermediate calculations and enter your
answers as a percent rounded to 2 decimal places, e.g., 32.16. Use
365 days in a year.)
Stated Rate
(APR)
Number of
Times
Compounded
Effective Rate (EAR)
%
Semiannually
13.50
%
%
Monthly
9.50
%
Weekly
11.50
%
Daily
9.50

Find the APR, or stated rate, in each of the following cases
(Do not round intermediate calculations. Enter your answers
as a percent rounded to 2 decimal places, e.g.,
32.16.):
Stated Rate (APR)
Number of Times Compounded
Effective Rate (EAR)
%
Semiannually
12.4
%
Monthly
13.3
Weekly
11.0
Infinite
14.7

Find the APR, or stated rate, in each of the following cases (Do
not round intermediate calculations. Enter your answers as a
percent rounded to 2 decimal places, e.g., 32.16.):
Stated Rate (APR)
Number of Times Compounded
Effective Rate (EAR)
%
Semiannually
10.50%
Monthly
11.4
Weekly
9.1
Infinite
12.8

Find the APR, or stated rate, in each of the following cases:
(Do not round intermediate calculations. Enter your answers
as a percent rounded to 2 decimal places, e.g.,
32.16.)
Stated Rate
(APR)
Number of Times
Compounded
Effective
Rate (EAR)
%
Semiannually
12.2
%
Monthly
13.1
Weekly
10.8
Infinite
14.5

Find the APR, or stated rate, in each of the following cases
(Do not round intermediate calculations. Enter your answers
as a percent rounded to 2 decimal places, e.g.,
32.16.):
Stated Rate (APR)
Number of Times Compounded
Effective Rate (EAR)
%
Semiannually
12.1
%
Monthly
13.0
Weekly
10.7
Infinite
14.4

Find the APR, or stated rate, in each of the following cases
(Do not round intermediate calculations and enter your
answers as a percent rounded to 2 decimal places, e.g.,
32.16.):
Standard rate (APR) %
Number of times Compounded
Effective Rate (EAR)
semiannually
11.3%
Monthly
12.2%
Weekly
9.9%
Infinite
13.6%

Find the APR, or stated rate, in each of the following cases:
(Do not round intermediate calculations. Enter your answers
as a percent rounded to 2 decimal places, e.g.,
32.16.)
Stated Rate
(APR)
Number of Times
Compounded
Effective
Rate (EAR)
%
Semiannually
10.6
%
Monthly
11.5
Weekly
9.2
Infinite
12.9

You want to buy a new pickup for $42,854, and the finance office
at the dealership has quoted you an 8.4% APR loan for 6 years of
monthly payments. What is the effective annual rate on this loan?
(Do not include the percent sign (%). Enter rounded answer as
directed, but do not use the rounded numbers in intermediate
calculations. Round your answer to 2 decimal places (e.g.,
32.16).)

Banks sometimes quote interest rates in the form of “add-on
interest.” In this case, if a 1-year loan is quoted with an
interest rate of 21.5% and you borrow $1,000, then you pay back
$1,308. But you make these payments in monthly installments of $109
each.
a. What is the true APR on this loan?
(Do not round intermediate calculations. Enter your answer
as a percent rounded to 2 decimal places. Use a
financial calculator or Excel.)
b. What is...

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