You have agreed to a $90,000 fixed-rate loan from Wells Fargo Bank today and promise to repay the loan with 60 equal monthly payments at an APR of 7.00%.What is the EAR of this loan?

Question

Quizplus · Accepted Answer

The EAR (Effective Annual Rate) can be calculated using the formula: EAR = (1 + i/n)^(n) - 1, where i is the nominal rate (APR) and n is the number of compounding periods per year. For a monthly compounding loan with an APR of 7.00%, the EAR is approximately 7.23%.

You Have Agreed to a $90,000 Fixed-Rate Loan from Wells