Question

Borrowed 152300 for three years if the qouted rate (apr) is 11.75% and the compounding is daily what is the effective annual rate ?

Answer 1

The appropriate response is "12.47%".

Step-by-step explanation:

The given values are:

Borrowed amount,

= 152300

APR,

= 11.75%

i.e.,

= 0.1175

Now,

The effective annual rate will be:

=
`((1+APR)/(n) )^n`

On substituting the given values, we get

=
`((1+0.1175)/(365) )^(365)`

=
`((1.1175)/(365) )^(365)`

=
`1.12466-1`

=
`0.1247 \ or \ 12.47 \ percent`