Find the EAR In each of the following cases

a). Computation of the EAR:-

EAR = (1+APR/n)^n-1

Here,

APR = 10%

n = 4 periods (quarterly)

EAR = (1+10%/4)^4-1

= 1.1038 - 1

= 10.38%

b). Computation of the EAR:-

EAR = (1+APR/n)^n-1

Here,

APR = 15%

n = 12 periods (monthly

EAR = (1+15%/12)^12-1

= 1.1608 - 1

= 16.08%

c). Computation of the EAR:-

EAR = (1+APR/n)^n-1

Here,

APR = 15%

n = 365 periods (compounding daily)

EAR = (1+15%/365)^365-1

= 1.1618 - 1

= 16.18%

d). Computation of the EAR:-

EAR = e^rt - 1

Here,

T = Infinite (continuous compounding)

e = 2.7183

EAR = 2.7183^16% - 1

= 1.1735 - 1

= 17.35%