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What is the effective annual rate (EAR) for each of the following one-year, $1,000 bank loans?

a) A loan with an APR of 5.8%, compounded monthly

The EAR in this case is.... %. (Round to one decimal place.)

b) A loan with an APR of 5.8%, compounded annually, that also has a compensating balance requirement of 9.5% (on which no interest is paid)

The EAR in this case is.... %. (Round to one decimal place.)

c) A loan with an APR of ......, compounded annually, that has a 1.05% loan origination fee

The EAR in this case is....... %. (Round to one decimal place.)

This question has been answered before but wrong answer. I need a very good finance person to look into it.

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Financial Management, Finance

Category:- Financial Management
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