What is the appropriate interest rate to use when making future value or present value calculations?

Question

Quizplus · Accepted Answer

The effective annual interest rate (EAR) accounts for compounding, which is important in calculating the true return on investment. The APR does not account for compounding, so it is not as accurate. The quoted interest rate may be misleading and not reflect the true cost of borrowing or return on investment. Simple interest is only applicable for very basic calculations and does not account for compounding.

What Is the Appropriate Interest Rate to Use When Making