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Find the EAR for the stated rate (APR) of 9

Finance Oct 20, 2020

Find the EAR for the stated rate (APR) of 9.9 percent compounded quarterly. (round final percentage 2 decimal places)

Expert Solution

Computation of the effective annual rate (EAR):-

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

Here,

n = 4 periods (quarterly)

EAR = (1+9.9%/4)^4 -1

= (1.02475^4) -1

= 1.1027 - 1

= 10.27%

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