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30 Jan 2018

You have agreed to a $50,000 fixed-rate loan from First National Bank today and promise to repay the loan with 36 equal monthly payments at an APR of 6.50%. What is the EAR of this loan?

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22 Jul 2021

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Related questions

Which one of the following statements is correct?

The EAR is always greater than the APR.

The APR is equal to the EAR for a loan that charges interest monthly.

The APR on a monthly loan is equal to (1 + monthly interest rate)12 - 1.

The EAR, rather than the APR, should be used to compare both investment and loan options.

The APR is the best measure of the actual rate you are paying on a loan.

You are purchasing a home for $220,000 and are shopping for a loan. You have a total of $40,000 to put down. In addition, there are $800 in closing costs loan and any loan fee that might be charged. Bank A offers a 10% APR amortized over 20 years with 240 equal monthly payments. There is no loan fee. Bank B offers an 8.5% APR amortized over 20 years with 240 equal monthly payments. There is a 4% loan fee (one time up front loan charge of 4% of the loan. Calculate the monthly mortgage payment of both loans and identify which is the better loan.

What is the effective annual rate (EAR) for each of the following one-year, $1,000 bank loans?

a.) A loan with an APR of 5.8%, compounded monthly

The EAR in this case is.... %. (Round to one decimal place.)

b.) A loan with an APR of 5.8%, compounded annually, that also has a compensating balance requirement of 9.5% (on which no interest is paid)

The EAR in this case is.... %. (Round to one decimal place.)

c.) A loan with an APR of ......, compounded annually, that has a 1.05% loan origination fee

The EAR in this case is....... %. (Round to one decimal place.)

This question has been answered before but wrong answer. I need a very good finance person to look into it.

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