Asked by Leryia Hughes on May 13, 2024
Verified
If an interest rate of 8.9% compounded semiannually is charged on a car loan, what effective rate of interest should be disclosed to the borrower?
Compounded Semiannually
Interest that is computed and appended to the original amount semi-annually.
Effective Rate
The actual interest rate that an individual earns or pays on an investment, loan, or other financial product, after compounding and other factors are taken into account.
Car Loan
A financial loan specifically used to purchase a car, typically secured by the car itself as collateral.
- Determine the effective rate of interest for different compounding periods.
Verified Answer
OF
Learning Objectives
- Determine the effective rate of interest for different compounding periods.