Assume that you just received your credit card statement and the APR (Annual Percentage Rate) listed on your statement is 21.7%. When you look closer, it states that the interest is compounded daily. What is the EAR (or the Effective Annual Rate) on your credit card?
Answer to relevant QuestionsWhich investment would you rather own: (a) Investment A is 12% annually; (b) Investment B is 11.9% semiannually; (c) Investment C is 11.8% quarterly; (d) Investment D is 11.7% dailyFind the interest rate to the nearest tenth on the proceeds for the following simple discount notes. $5,000; discount rate 8.1%; length of loan 6 months.Find the interest rate (with annual compounding) that makes the statement true (rounded to the nearest dollar) $8,500 grows to $12,161 in 7 years.What is the future value of $1,200 a year for 40 years at 8 percent interest? Assume annual compounding.Bank A pays 6% simple interest annually. Bank B pays 5.9% interest, with annual compounding. Bank C pays 5.8% interest, with monthly compounding.a. How long will it take for your money to double in each of the three banks? ...
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