Relationship between the ear and the apr

Reference no: EM131313259

Consider a borrowing arrangement in which the annual percentage rate (APR) is 8%.

a. Under what conditions does the effective annual rate of interest (EAR) differ from the APR of 8%?

b. As the frequency of compounding increases within the annual period, what happens to the relationship between the EAR and the APR?

Reference no: EM131313259

Questions Cloud

Accurate predictions about company financial condition : Then, imagine you are an investor or creditor; suggest the ratios that you believe would provide an investor or creditor with the most important information needed to make accurate predictions about the company's financial condition. When analyzin..

What is orange trees intrinsic value of equity : OrangeTree Corporation’s value of operations is estimated to be $550 million. Orange Tree has $100 million in debt (it has no preferred stock) and 10 million shares of common stock outstanding. Assume that OrangeTree has not yet made the distribution..

Bit array implementation : Both implementations should use the same sets. Using the Timing class, compare the major operations (union, intersection, difference, and subset) of each implementation and report the actual difference in times.

Valuate current or future applications of biotechnology : Write a paper which includes the following: Evaluate current or future applications of biotechnology in the fields of medicine or agriculture

Relationship between the ear and the apr : As the frequency of compounding increases within the annual period, what happens to the relationship between the EAR and the APR?

Explain how a quarter-wave transformer works : Explain why a complete revolution (360 degrees) around the Smith chart represents a distance of λ/2 on the transmission line - Explain how a quarter-wave transformer works to achieve load matching.

What is balance in the account if you make no withdrawals : Suppose you deposit $1,000 in an account with an APR of 4%, with compounding quarterly.- After 10 years, what is the balance in the account if you make no withdrawals?

Design and present a data collection table : Design and present a data collection table that you will use to collect and monitor data pertaining to the second of two simulations when it starts. The data that you will collect should be determined based on what you learn from the simulation in..

Benchmark price–sales ratio for the company : TwitterMe, Inc., is a new company and currently has negative earnings. The company’s sales are $1,300,000 and there are 135,000 shares outstanding. If the benchmark price–sales ratio for the company is 5.3, how much will you pay for the stock? If the..

User Account

All Pages