Unformatted text preview: (1+.08/12) 12  1 = 8.3% (rounded). The EAR corresponding to an 8.2% APR with semiannual compounding = (1+.082/2) 21 = 8.3681%. So the depositor will prefer an account offering an 8.2% APR with semiannual compounding since its EAR is higher. 3. If the EAR is known to be 16.08% on a debt that has quarterly payments, what is the APR on the debt? A) 14.02% B) 14.82% C) 15.20% D) 15.60% APR/m (or i m ) = (1 + EAR) 1/m1 The quarterly interest rate = (1.1608) 1/41 = 3.80% (rounded). APR = i m x m So the APR = 0.038 × 4 = 15.20%....
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 Summer '09
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 Debt, Interest

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