An 8% APR with Monthly Compounding Is Closest to Which

question 62

Multiple Choice

An 8% APR with monthly compounding is closest to which of the following?

• A)an EAR of 6.7%
• B)an EAR of 7.72%
• C)an EAR of 8.3%
• D)an EAR of 8.5%
• E)an EAR of 9.14%

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Definitions:

Obsolescence

Obsolescence refers to the process or condition by which an object, service, or practice loses its value or utility due to aging, technological advancements, or changes in market preferences.

Present Value Factor

A factor used to calculate the present value of a future amount of money or stream of cash flows given a specific rate of return.

Desired Rate

A term that can refer to the ideal or target interest rate set by an individual or institution, often in the context of investing or borrowing.

Average Rate of Return

A calculation used to estimate the profitability of an investment, expressed as a percentage of the initial cost of the investment.