Google Answers: Effective annual rate

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Q: Effective annual rate ( No Answer, 1 Comment )

Question

Subject: Effective annual rate
Category: Miscellaneous
Asked by: meanie222-ga
List Price: $2.00

Posted: 13 Mar 2005 11:42 PST
Expires: 12 Apr 2005 12:42 PDT
Question ID: 493965

What is the annual percentage rate (APR) on a loan that charges
interst of 1.4% per month? What is the effective annual rate (EAR)?

Answer

There is no answer at this time.

Comments

Subject: Re: Effective annual rate
From: bozo99-ga on 28 Mar 2005 12:05 PST

Applying 1.4 % interest is to multiply the loan by 1.014.
Doing this monthly for a year is 12 times.
(1.014) ^ 12 is 1.181 so the APR is about 18%.

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