APR vs. EAR

(APR=r) What annual interest rate would you need in order to have an ordinary annuity of $7,500 per year accumulate to $279,600 in 15 years?

 $EAR\ =\ \left(1+\frac{APR}{m}\right)^m-1$   $APR\ =\left(\left(1+EAR\right)^{\left(\frac{1}{m}\right)}-1\right)\cdot m$  

• 8.75%

• 10.2%

• 12%

• 14%

(APR=r) What annual interest rate is implied if you lend someone $1,850 and are repaid $2,078.66 in 2 years?

 $EAR\ =\ \left(1+\frac{APR}{m}\right)^m-1$   $APR\ =\left(\left(1+EAR\right)^{\left(\frac{1}{m}\right)}-1\right)\cdot m$  

• 4%

• 5%

• 6%

• 5.5%

(APR=r*12)What nominal annual interest rate is implied if you borrow $12,500 and repay $21,364.24 in three years with monthly compounding?

 $EAR\ =\ \left(1+\frac{APR}{m}\right)^m-1$   $APR\ =\left(\left(1+EAR\right)^{\left(\frac{1}{m}\right)}-1\right)\cdot m$  

• 12%

• 15%

• 17%

• 18%

(APR=EAR=r) The True Corporation had earnings of $0.20 per share in 1978. By 1995, a period of 17 years, its earnings had grown to $1.01 per share. What was the compound annual rate of growth in earnings?

 $EAR\ =\ \left(1+\frac{APR}{m}\right)^m-1$   $APR\ =\left(\left(1+EAR\right)^{\left(\frac{1}{m}\right)}-1\right)\cdot m$  

• 11%

• 10%

• 12%

• 11.5%

(APR=r*12)A $10,000 car loan has payments of $361.52 due at the end of each month for three years. What is the nominal interest rate?

 $EAR\ =\ \left(1+\frac{APR}{m}\right)^m-1$   $APR\ =\left(\left(1+EAR\right)^{\left(\frac{1}{m}\right)}-1\right)\cdot m$  

• 15%

• 18%

• 16%

• 10%

(APR=r*12)A car dealer offers payments of $822.59 per month for 60 months on a $41,000 car after making a $4,000 down payment. What is the loan's APR?

 $EAR\ =\ \left(1+\frac{APR}{m}\right)^m-1$   $APR\ =\left(\left(1+EAR\right)^{\left(\frac{1}{m}\right)}-1\right)\cdot m$  

• 13.98%

• 14.98%

• 11.98%

• 8.98%

(APR=r)Your retirement account has a current balance of $50,000. What interest rate would need to be earned in order to accumulate a total of $1,000,000 in 30 years, by adding $6,000 annually?

 $EAR\ =\ \left(1+\frac{APR}{m}\right)^m-1$   $APR\ =\left(\left(1+EAR\right)^{\left(\frac{1}{m}\right)}-1\right)\cdot m$  

• 5.02%

• 7.24%

• 9.80%

• 10.07%

(APR=r*2)What APR is being earned on a deposit of $5,000 made ten years ago today if the deposit is worth $9,948.94 today? The deposit pays interest semi-annually.

 $EAR\ =\ \left(1+\frac{APR}{m}\right)^m-1$   $APR\ =\left(\left(1+EAR\right)^{\left(\frac{1}{m}\right)}-1\right)\cdot m$  

• 3.56%

• 6.76%

• 7.00%

• 7.12%

(APR)What is the monthly rate of interest that will yield an annual effective interest rate of 12percent?

 $EAR\ =\ \left(1+\frac{APR}{m}\right)^m-1$   $APR\ =\left(\left(1+EAR\right)^{\left(\frac{1}{m}\right)}-1\right)\cdot m$  

• 1.499%

• 0.949%

• 0.953%

• 1.949%

(APR)What is the APR on a loan with an effective annual rate of 15.71% and weekly compounding?

 $EAR\ =\ \left(1+\frac{APR}{m}\right)^m-1$   $APR\ =\left(\left(1+EAR\right)^{\left(\frac{1}{m}\right)}-1\right)\cdot m$  

• 13.11%

• 13.61%

• 12.61%

• 14.61%