The time taken to pay off the mortgage of 150,000 for the unchanged EAR. Introduction: An Effective Annual Rate is the interest rate that is actually earned at the end of one year. As the compounding period increases, the Effective Annual Rate also increases.

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Chapter 5, Problem 20P

Summary Introduction

To determine: The time taken to pay off the mortgage of 150,000 for the unchanged EAR.

Introduction:

An Effective Annual Rate is the interest rate that is actually earned at the end of one year. As the compounding period increases, the Effective Annual Rate also increases.

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