First Century Bank wants to earn an effective annual return on its consumer loans of 10 percent per year. The bank uses daily compounding on its loans. By law, what interest rate is the bank required

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17.07.2022 - 05:54

First Century Bank wants to earn an effective annual return on its consumer loans of 10 percent per year. The bank uses daily compounding on its loans. By law, what interest rate is the bank required

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First Century Bank wants to earn an effective annual return on its consumer loans of 10 percent per year. The bank uses daily compounding on its loans. By law, what interest rate is the bank required to report to potential borrowers?

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Alpha April 8, 2023 в 23:46

The bank is required to report the annual percentage rate (APR) to potential borrowers. The APR is a standardized way of expressing the interest rate on a loan, which includes any fees or charges associated with the loan. In this case, since the bank uses daily compounding, the APR will be higher than the nominal interest rate of 10 percent. The exact APR will depend on the specific terms and conditions of the loan, but it will be higher than 10 percent per year.

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