Question

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 12.3% Monthly 13.2 Weekly 10.9 Infinite 14.6

Answer 1

Answer and Explanation:

The computation is as follows:

The following is the formula for the annual percentage rate

Annual percentage rate = m × [(1 + effective annual rate)1 ÷ m - 1]

where,

m = compounding period

For Semiannually

APR = 2× [(1.1123)^1 ÷ 2 - 1]

= 11.94%

For monthly

APR = 12 × [(1.132)^1 ÷ 12 - 1]

= 12.46%

For weekly

APR = 52 × [(1.109)^1 ÷ 52 - 1]

= 10.36%

For infinite

APR = ln(1 + 0.0146)

= 13.63%