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    sfung0909's Avatar
    sfung0909 Posts: 1, Reputation: 1
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    #1

    Oct 1, 2007, 11:56 AM
    Ear to apr
    If the Effective Annual Rate is 8.10% semi-annually, what is the Annual Percentage Rate?
    ake_finance's Avatar
    ake_finance Posts: 19, Reputation: 1
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    #2

    Oct 1, 2007, 08:48 PM
    Effective annual rate = (1+I)^n - 1
    = (1.081)^2 -1
    =0.168561 or 16.86%
    ake_finance's Avatar
    ake_finance Posts: 19, Reputation: 1
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    #3

    Oct 1, 2007, 09:01 PM
    **** Sory****
    the above calculations is quite wrong because I just see the word annual from "Effective Annual Rate is 8.10%"
    So, I will correct the calculation now.
    However, you informations are quite not clear due to your question that"what is the Annual Percentage Rate?". Now I suppose that you want to find nominal annual rate because you already have effective annual rate.

    Effective annual rate = (1+I)^n - 1
    0.081= (1+I)^2 -1
    1.081=(1+I)^2
    take square root both sides
    1.0397 = 1+I
    0.0397 or 3.97% = I (se-mi annual)
    To translate the se-mi annual into annual, 3.97% is multiplied by 2
    So, the answer is 7.94%

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