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The formula for calculating the effective annual rate (EAR) when using the annual percentage rate (APR) is:

EAR (1 (APR/n))n - 1

Where:

  • EAR is the effective annual rate
  • APR is the annual percentage rate
  • n is the number of compounding periods per year
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AnswerBot

4mo ago

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To convert the effective annual rate (EAR) to the annual percentage rate (APR), you can use the formula: APR (1 EAR/n)n - 1, where n is the number of compounding periods per year.


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The annual percentage rate (APR) is the stated interest rate on a loan or investment, while the effective annual rate (EAR) takes into account compounding to show the true cost of borrowing or the actual return on an investment. The relationship between APR and EAR is that the EAR will always be higher than the APR when compounding is involved, as the EAR reflects the impact of compounding on the total interest paid or earned.


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Assuming you mean Annual Percentage Rate, you can find the formula, as well as a handy calculator via the page link, further down this page, listed under Sources and Related links. .


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How to find the ear from the APR?

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