Question

*Finance* urgent

If the number of compoundings per year is 12 and EAR is 14%, what is the APR? Enter your answer as a percentage point, and round your answer to two decimal places (e.g. if the answer is 11.3432%, enter it as 11.34, without the % sign).

Numeric response:

Answer 1

Compute the annual percentage rate (APR), using the equation as shown below:

EAR = (1 + APR/ Compounding period)^{Compounding period} – 1

0.14 = {(1 + APR /12)¹² – 1

Rearrange the above-mentioned equation to determine the APR as follows:

1 + APR/12 = (1 + 0.14)^1/12

1 + APR/12 = 1.01097885195

           APR = (1.01097885195 - 1)*12

                    = 13.17462234%

Hence, the APR is 13.17.