Asked by Victoria Brungot on Jun 02, 2024
Verified
Calculate the effective annual rate for 18% compounded annually.
A) 19.8%
B) 16.8%
C) 18.0%
D) 19.0%
E) 20.6%
Compounded Annually
This is an interest calculation method where interest is added to the principal once a year.
- Acquire the ability to determine the Effective Annual Rate (EAR) from nominal and compounded interest rates.
Verified Answer
ZK
Zybrea KnightJun 04, 2024
Final Answer :
C
Explanation :
The effective annual rate (EAR) for an interest rate compounded annually is simply the nominal rate itself, which in this case is 18%.
Learning Objectives
- Acquire the ability to determine the Effective Annual Rate (EAR) from nominal and compounded interest rates.