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Same took out a loan for 6200 that charges an annual rate of 8.6% compounded quarterly. Answer each part. Sent picture

Same Took Out A Loan For 6200 That Charges An Annual Rate Of 86 Compounded Quarterly Answer Each Part Sent Picture class=

Sagot :

Given:

Sam took out a loan for 6200 that charges an annual rate of 8.6% compounded quarterly.

Required:

Find effective annual interest rate.

Explanation:

a).

We know compound interest formula

[tex]A=P(1+\frac{r}{n})^{nt}[/tex]

Now,

[tex]undefined[/tex]

b).

We know the effective annual interest rate

[tex]EAR=(1+\frac{i}{m})^m-1[/tex]

EAR = Effective annual interest

i = Annual nominal rate of interest

m = No. of compounding periods in a year.

[tex]\begin{gathered} EAR=(1+\frac{0.086}{4})^4-1 \\ EAR=0.088813 \\ \text{ To find percentage multiply by 100 } \\ =0.088813\times100 \\ =8.8813\% \end{gathered}[/tex]

Answer:

answered the question.

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