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Find the EAR in each of the following cases (Use 365 days a year. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.): Stated Rate (APR) Number of Times Compounded Effective Rate (EAR) 8.9% Quarterly % 17.9 Monthly 13.9 Daily 10.9 Infinite

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Answer and Explanation:

The computation of the effective annual rate for the following cases are as follows;

As we know that

EAR = (1 + APR ÷ m)^m - 1

Here m = compounding periods

1. For quartely

EAR = (1 + 0.089 ÷ 4)^4 - 1

= 9.20%

2. For monthly

EAR = (1 + 0.179 ÷ 12)^12 - 1

= 19.44%

3. For daily

EAR  = (1 + 0.139 ÷ 365)^365 - 1

= 14.91%

4. For infinity

EAR = (e)^APR - 1

Here,

e = 2.71828

EAR=(2.71828)^0.109 - 1

= 11.52%

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