Question

Find the EAR in each of the following cases (Use 365 days a year. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.):

Stated Rate (APR)				Number of Times Compounded				Effective Rate (EAR)
	9.4	%			Quarterly			%
	18.4				Monthly
	14.4				Daily
	11.4				Infinite

Answer 1

EAR = [1 + (APR / m)]^m − 1

EAR = [1 + (0.094 / 4)]⁴ − 1 = 0.0974 or 9.74%

EAR = [1 + (0.184 / 12)]¹² − 1 = 0.2003 or 20.03%

EAR = [1 + (0.144 / 365)]³⁶⁵ − 1 = 0.1549 or 15.49%

EAR = e^q − 1 = e^0.114− 1 =  0.1208 or 12.08%