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The WIZE Bank has offers you the choice between two loans: #1 charges interest …

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Wize University Introduction to Finance Textbook > Time Value of Money

Effective Annual Rate

3 Activities

The WIZE Bank has offers you the choice between two loans:
#1 charges interest at a rate of 9% compounded quarterly
#2 charges interest at a rate of 9.05% compounded semi-annually

Which loan do you prefer and why?
More Effective Annual Rate Questions:
Convert a 8.4% effective quarterly rate to an effective semi-annual rate.
Which of the following provides the highest annual return?
Your investments are currently placed in an account earnings 7% interest per year. Your investment advisor has just approached you to offer you a new account that effectively earns 2% more than your current account. What is the quoted rate of this new account if the return compounds semi-annually?
Round your final answer to 2 decimal places. Enter your answer as a percentage but omit the symbol. For example, enter 7.44 for 7.44%.
What is the effective semi-annual rate of 5% APR compounded every 2 years?
What is the effective annual rate of 10% APR compounded every 2 years?
What is the effective annual rate of 16% APR compounded daily (365 days)?
What is the effective annual rate of 7% APR compounded monthly? Round your answer to 2 decimal places.
A bank account earns an effective annual rate of 12% with bi-weekly compounding. What is the quoted rate of the account? Round your answer to 2 decimal places.
WIZE Bank offers customers a savings account with 8% APR compounded weekly. It would like to offer a new savings account that is equivalent to the first one, but with semi-annual compounding. What rate should the new account quote? Round your final answer to 2 decimal places.