What is the effective annual rate if a bank charges you 8.00% compounded quarterly?

Name: What is the effective annual rate if a bank charges you 8.00% compounded quarterly?
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Question

Quizplus · Accepted Answer

The effective annual rate (EAR) can be calculated using the formula: EAR = (1 + i/n)^(n*t) - 1, where i is the nominal rate (8.00%), n is the number of compounding periods per year (4 for quarterly), and t is the number of years (1 year). Plugging in the values, EAR = (1 + 0.08/4)^(4*1) - 1 = 0.0824 or 8.24%.

What Is the Effective Annual Rate If a Bank Charges