Question

Borrowed 152300 for three years if the qouted rate (apr) is 11.75% and the compounding is daily what is the effective annual rate ?

Answer 1

Answer:

The appropriate response is "12.47%".

Explanation:

The given values are:

Borrowed amount,

= 152300

APR,

= 11.75%

i.e.,

= 0.1175

Now,

The effective annual rate will be:

= $(\frac{1+APR}{n} )^n$

On substituting the given values, we get

= $(\frac{1+0.1175}{365} )^{365}$

= $(\frac{1.1175}{365} )^{365}$

= $1.12466-1$

= $0.1247 \ or \ 12.47 \ percent$