APR is 20%, compounded monthly. What is the semiannual effective interest rate?

Question

Question

business economics

Answer 1

Answer #1

i = 20%
monthly interest rate (r) = 20%/12 = 1.67%
semiannual effective interest rate = (1 + monthly interest rate)⁶ - 1

semiannual effective interest rate = (1 + 1.67%)⁶ - 1 = 10.426%

Answer 2

Similar Homework Help Questions

What is the effective annual rate for an APR of 17.00 percent compounded monthly?

What is the effective annual rate for an APR of 17.00 percent compounded monthly?
What is the effective annual rate for an APR of 15.70 percent compounded monthly?

What is the effective annual rate for an APR of 15.70 percent compounded monthly?
My APR is 20%, compounded daily. What is my annual effective interest rate (APY or ia)?

My APR is 20%, compounded daily. What is my annual effective interest rate (APY or ia)?

What is the effective annual rate for an APR of 16.20 percent compounded monthly? Multiple Choice...

What is the effective annual rate for an APR of 16.20 percent compounded monthly? Multiple Choice 17.21% 17.46% 18.33% 17.33% 16.35%
What is the effective annual rate for an APR of 17.40 percent compounded monthly? Multiple Choice...

What is the effective annual rate for an APR of 17.40 percent compounded monthly? Multiple Choice 18.57% 17.64% ОО 19.80% О 1871% 18.71% 18.86%
If the APR for a car loan is 14%, what is the effective annual interest rate...

If the APR for a car loan is 14%, what is the effective annual interest rate (in %) if interest on the loan is compounded monthly and you have biweekly payments?

If the APR for a car loan is 5%, what is the effective annual interest rate...

If the APR for a car loan is 5%, what is the effective annual interest rate (in %) if interest on the loan is compounded monthly and you have biweekly payments? Is the answer 0.20812%?
Find the APR, or stated rate, in each of the following cases: a. An effective interest...

Find the APR, or stated rate, in each of the following cases: a. An effective interest of 6% compounded semiannually b. An effective interest of 6% compounded monthly c. An effective interest of 10% compounded weekly d. An effective interest of 13% with continuous compounding
3.2 If your credit card calculates interest based on 19.25% APR, compounded monthly: (a) What are...

3.2 If your credit card calculates interest based on 19.25% APR, compounded monthly: (a) What are your monthly interest rate and annual effective interest rate? (b) If your current outstanding balance is $3,400 and you skip payments for four months, what would be the total balance four months from now?

2. What nominal annual interest rate compounded monthly is equivalent to an effective annual interest rate...

2. What nominal annual interest rate compounded monthly is equivalent to an effective annual interest rate of 8% per year for the first 10 years followed by a nominal annual interest rate of 5% compounded daily for the second 10 years? Give your answer as a percent rounded to three decimal places. Answer: