Question

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

Stated Rate (APR)	Number of Times Compounded	Effective Rate (EAR)
10.50	%	Quarterly		%
15.50	%	Monthly		%
16.50	%	Daily		%
12.50	%	Semiannually		%

Answer 1

EAR =	( 1 + r )^n - 1
	Compounded Quarterly
EAR=	( 1 + 10.50%/4)^4 - 1
EAR=	10.92%
	Compounded Monthly
EAR=	( 1 + 15.50%/12)^12 - 1
EAR=	16.65%
	Compounded Daily
EAR=	( 1 + 16.50%/365)^365 - 1
EAR=	17.93%
	Compounded Semianually
EAR=	( 1 + 12.50%/2)^2 - 1
EAR=	12.89%