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2 Jun 2019

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.

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Beverley Smith
Beverley SmithLv2
4 Jun 2019

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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.

mortgage broker is offering a $284,000 20-year mortgage with a teaser rate. In the first two years of the mortgage, the borrower makes monthly payments on only a 5.0 percent APR interest rate. After the second year, the mortgage interest rate charged increases to 8.0 percent APR

What are the monthly payments in the first two years?

What are the monthly payments after the second year?

To borrow $800, you are offered an add on interest loan at 9.2 percent with 12 monthly payments. Compute the 12 equal payments.

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Rachel purchased a $19,500 car three years ago using a 8 percent, 4-year loan. She has decided that she would sell the car now, if she could get a price that would pay off the balance of her loan.


What is the minimum price Rachel would need to receive for her car?

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A.

When comparing investment it is best not to rely solely on quoted rates.

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The APR on la loan with monthly payments is less than the annual interest you actually pay.

D.

The Apr is the interest rate per period multiplied by the number of periods per year.

E.

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