# Effective Annual Rate: Formula & Calculations

Instructions:

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

## Quiz & Worksheet Goals

• 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