Calculate effective annual interest rate, Finance Basics

Assignment Help:

1^st bank offers you a car loan at an annual interest rate of 10% compounded monthly. What effective annual interest rate is the bank charging you?

Solution - Calculate effective annual interest rate

a	Rate of Interest	10%
b	Frequency of compunding (monthly)	12
c	Effective annual interest rate	10.47%
	(1+ 10%/12)^12 - 1
	The rate is divided by 12 and power is 12 as the rate
	is annual and interest is compounded monthly.

Related Discussions:- Calculate effective annual interest rate

Profitability index or p.i., Profitability Index or P.I. P.I. (benefit...

Profitability Index or P.I. P.I. (benefit-cost ratio) = Present value of inflows / Present value of cash outlay Whether P.I. is greater than 1.0, invest and whereas less th

What do you meant by the term life insurance contract, Question 1: (a) ...

Question 1: (a) What do you meant by the term ‘Life Insurance Contract'? (b) Many people prefer to choose Single life policies compared to Joint life policies. Why is t

What are the types of financial assets, What are the types of financial ass...

What are the types of financial assets? Types of Financial Assets: a. Loans b. Bank Deposits c. Stocks A share of ownership within a company d. Bonds A promis

Working capital cycle, Working Capital Cycle The Concept of Working C...

Working Capital Cycle The Concept of Working Capital/Cash Operating Cycle Working capital cycle refers to period such elapses between the payment for raw materials bought

Stock market index, Stock Market Index Definition of Stock Market Ind...

Stock Market Index Definition of Stock Market Index An index is a numerical figure that measures relative change in variables between two type of durations. Examples

Finc310, •How did the stock market indices react to these changes? •How di...

•How did the stock market indices react to these changes? •How did long-term U.S. Treasury bond yields react to these changes? •What happens to borrowers, savers, investors, and

Setting up compdcfbv, #questiofvdgbgbgnfbfn..

#questiofvdgbgbgnfbfn..

Debentures and bonds, how can debentures be explained in class in term of g...

how can debentures be explained in class in term of game, role play etc....?

Define the terms proprietorship, Briefly define the terms proprietorship, p...

Briefly define the terms proprietorship, partnership, and corporation. Ans: The term proprietorship is used as a business owned by one person. Two or more than two people wh

Types of stock markets, Types of Stock Markets 1. Over the Counter or...

Types of Stock Markets 1. Over the Counter or OTC and Organised Exchange market This is whereas the selling and buying of securities is done through sellers and buyers ar

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages