What is the effective annual rate of 8% compounded daily?

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Expert Solution

Effective annual rate is calculated using the below formula:

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

Where r is the interest rate and n is the number of compounding periods in one year.

EAR= (1+0.08/365)^365 - 1

= 1.0833 - 1

= 0.0833*100

= 8.83%.

jeff jeffy answered 2 years ago

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