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Effective Annual Rate: Formula & Calculations

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question 1 of 3

What does n equal in the formula for the effective annual rate if the calculations are done on a quarterly basis (4 times a year)?

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1. Calculate the effective annual rate for an interest rate of 10 percent with calculations done on a monthly basis:

2. Your beginning balance is $1200. With an APR of 12 percent, what is your balance at the end of the year if calculations are done on a monthly basis?

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About This Quiz & Worksheet

The questions on this quiz ask students to calculate the effective annual rate.

Quiz & Worksheet Goals

Quiz questions will ask you about:

  • Finding n
  • Calculating the effective annual rate
  • Credit card interest rate calculations

Skills Practiced

  • Problem solving - use acquired knowledge to solve practice problems that ask you to calculate the effective annual rate
  • Knowledge application- use your knowledge to answer a question about finding n to calculate the effective annual rate
  • Information recall - access the knowledge you have gained regarding interest rate calculations for credit cards

Additional Learning

With the help of the lesson entitled Effective Annual Rate: Formula & Calculations you can expand your knowledge of this subject. Here are some goals that the information in this lesson will help you meet:

  • Calculate the effective annual rate
  • Identify parts of the effective annual rate formula
  • Find the annual percentage rate
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