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Unformatted text preview: (See Chapter 6/2 #1) o You should NEVER divide the effective rate by the number of periods per year it will NOT give you the period rate. Things to remember o You ALWAYS need to make sure that the interest rate and the time period match If you are looking at annual periods, you need an annual rate If you are looking at monthly periods, you need a monthly rate o If you have an APR based on monthly compounding, you have to use monthly periods for lump sums, or adjust the interest rate appropriately if you have payments other than monthly EAR Formula o (see 6/2, #2, 3)\...
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This note was uploaded on 04/07/2008 for the course BA 3341 taught by Professor Polkovnichenko during the Spring '08 term at University of Texas at Dallas, Richardson.
 Spring '08
 Polkovnichenko
 Accounting, Compounding, Interest

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