Find the annual percentage rate on a loan corresponding to 7.36% compounded quarterly (in %).

(NotesL Use 3 digits after decimal point)

To calculate the Annual Percentage Rate (APR) for a loan compounded quarterly, we use the following formula:

\[
APR = \left( 1 + \frac{r}{n} \right)^n - 1
\]

where:
- \(r\) is the nominal interest rate (in decimal form),
- \(n\) is the number of compounding periods per year.

Here, \(r = 7.36\%\) (which is \(0.0736\) in decimal form), and the loan is compounded quarterly, so \(n = 4\).

Let me calculate this for you:

\[
APR = \left(1 + \frac{0.0736}{4}\right)^4 - 1
\]

I'll compute this.The Annual Percentage Rate (APR) for a loan with a 7.36% nominal interest rate compounded quarterly is **7.566%**.

Would you like more details on the process, or do you have any questions?

Here are 5 related questions to consider:
1. How does compounding frequency affect the APR of a loan?
2. What would the APR be if the interest were compounded monthly instead of quarterly?
3. How does the nominal rate differ from the effective interest rate?
4. What is the relationship between APR and the actual interest paid over time?
5. How would the APR change if the nominal rate increased to 8%?

**Tip:** The more frequently interest is compounded, the higher the APR will be, even if the nominal rate remains the same.

Find the annual percentage rate on a loan corresponding to 7.36% compounded quarterly (in %).

Learn how to calculate the Annual Percentage Rate (APR) for a loan with a 7.36% nominal interest rate compounded quarterly. This guide provides a step-by-step solution using compound interest formulas and is suitable for students in Grades 10-12.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation