Question: Like cash flows, the interest rate can also be compounded over time when compounding the interest rate were simply accounting for the interest being canned

Like cash flows, the interest rate can also be compounded over time when compounding the interest rate were simply accounting for the interest being canned on interest over a time period One example of the computation of an annual compounded or otective interest rate is associated with your credit card You recently received a letter from a local bank that offers you a new credit card that has no nulle It states that the annual percentage rate (APR) 8 percent on outstanding b es Note that the annual porcentage rate does not account for compounding the the APRS imply the periodic tale mes the number of periods What is the effective annual interest rate? (This rate is subject to monthly compounding) Record your answer as a decimal

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