Answered: Which of the following is correct…

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Finance

Which of the following is correct regarding the APR?

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money

Section: Chapter Questions

Problem 9.1KTQ

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Question

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2) I need help with finance homework questions asap, Multiple choice question.

Which of the following is correct regarding the APR?

The APR is the rate which lenders are required to disclose.

The APR is greater than the effective annual rate.

The APR formula for rate disclosure is [1 + (r/m)]^m-1.

The APR considers all the effects of compounding.

The APR is best used to compare offers from various lenders.

Expert Solution

Step 1

APR:

It refers to the annual rate charged on a loan or earned on an investment.
APR is used by lenders and might not reflect the true cost of borrowing.

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