Question

Find the APR, or stated rate, in each of the following cases (Do not round intermediate...

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.):

Stated Rate (APR) # of times Compounded Efective rate (EAR)
semiannual 11.3%
monthly 12.2%
weekly 9.9%
infinite 13.6%

Homework Answers

Answer #1

a.EAR=[(1+APR/m)^m]-1
where m=compounding periods

0.113=(1+APR/2)^2-1

(1+0.113)=(1+APR/2)^2

APR=[(1+0.113)^(1/2)-1]*2

=11%(Approx).

b.EAR=[(1+APR/m)^m]-1
where m=compounding periods

0.122=(1+APR/12)^12-1

(1+0.122)=(1+APR/12)^12

APR=[(1+0.122)^(1/12)-1]*12

=11.57%(Approx).

c.EAR=[(1+APR/m)^m]-1

where m=compounding periods

0.099=(1+APR/52)^52-1

(1+0.099)=(1+APR/52)^52

APR=[(1+0.099)^(1/52)-1]*52

=9.45%(Approx).

d.

EAR=(e)^APR-1

where e=2.71828

0.136=(2.71828)^APR-1

1.136=2.71828^APR

Taking log on both sides;

log 1.136=APR*log 2.71828

APR=log 1.136/log 2.71828

=12.75%(Approx).

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