Tai Credit corp wants to earn an effective annual rate of 17.5 percent. The bank uses...

Tai Credit corp wants to earn an effective annual rate of 17.5 percent. The bank uses daily compounding on its loans. What is the interest rate that the bank is required to charge its potential borrowers (hint: APR).

Solutions

Expert Solution

APR = m[(1 + EAR)^(1/m) – 1]

APR = 365[(1.175)^(1/365) − 1]

APR = 0.1613 or 16.13%

jeff jeffy answered 2 years ago

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