ECONOMICS
FINANCIAL MARKETS
Question
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$401.84


$541.14


$400.00


$444.00

Detailed explanation1: The APY for a 1% rate of interest compounded monthly would be 12.68% [(1 + 0.01)^12 – 1 = 12.68%] a year. If you only carry a balance on your credit card for one month’s period, you will be charged the equivalent yearly rate of 12%.
Detailed explanation2: EAR Example 12683 or 12.683%, which is the effective annual interest rate. Even though the bank offered a 12% stated interest rate, your money grew by 12.683% due to monthly compounding.
Detailed explanation3: How do you find the annual percentage rate? APR can be found with the formula, APR = ((Interest + Fees / Principal or Loan amount) / N or Number of days in loan term)) x 365 x 100. Is the annual percentage rate the same as the interest rate? No, APR is broader than the interest rate.
Detailed explanation4: Equated Monthly Installment (EMI) Formula The EMI flatrate formula is calculated by adding together the principal loan amount and the interest on the principal and dividing the result by the number of periods multiplied by the number of months.