Answered step by step
Verified Expert Solution
Question
1 Approved Answer
If a bank wants to earn an effective annual return (EAR) of 15% on its consumer loan, what annual interest rate (APR) should the bank
- If a bank wants to earn an effective annual return (EAR) of 15% on its consumer loan, what annual interest rate (APR) should the bank quote to potential borrowers assuming the interest is calculated daily?
- The correct answer is 13.97%
- Continued with previous question. Suppose you have credit card loan balance from the previous bank and then you receive a credit card application invitation from another bank, which offers an introductory APR of 4.5%, compounded monthly for the first 6 months, and then the APR increases to 20%. Should you transfer your balance to the second bank?
- The correct answer is 12.93%
- How do I calculate both of these answers with a financial calculator?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started