Whether the rate of interest is 16.5%. The annual percentage rate, the effective annual rate, and the reason for stating the interest rate as the add-on interest rate Introduction: The annual rate that is earned from the investment or charged for a borrowing is an annual percentage rate and it is also represented as APR. Thus, the APR is calculated by multiplying the interest rate for a period with the number of months in a year. The effective annual rate is the rate of interest that is expressed as if it were compounded once in a year.

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Chapter 6, Problem 67QP

Summary Introduction

To find: Whether the rate of interest is 16.5%. The annual percentage rate, the effective annual rate, and the reason for stating the interest rate as the add-on interest rate

Introduction:

The annual rate that is earned from the investment or charged for a borrowing is an annual percentage rate and it is also represented as APR. Thus, the APR is calculated by multiplying the interest rate for a period with the number of months in a year. The effective annual rate is the rate of interest that is expressed as if it were compounded once in a year.

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