Solutions to Chapter 1

14. Semiannual compounding means that the 8.6 percent loan really carries interest of 4.3 percent per half year. Similarly, the 8.4 percent loan has a monthly rate of 0.7 percent. APR Compounding period Effective annual rate 8.6% 6 months (m = 2/yr) 1.0432 ( 1 = 0.0878 = 8.78% 8.4% 1 month ................
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