What is the effective annual interest rate on a 9 percent APR automobile loan that has monthly payments? A)9.00 percent B)9.38 percent C)9.81 percent D)10.94 percent Effective rate = (1 + (.09 + 12))¹²-1 = (1.0075)¹²-1 = 1)0938-1

Question

Quizplus · Accepted Answer

The effective annual interest rate formula for a loan with monthly payments is (1 + (APR/12))^12 - 1. Plugging in the values, we get (1 + (0.09/12))^12 - 1 = 0.0938 or 9.38%. Therefore, option B is the correct choice.

What Is the Effective Annual Interest Rate on a 9