FINANCE KQuestion 29 of 36 value 400 points You took out a l

FINANCE KQuestion 29 (of 36) value 4.00 points You took out a loan with an effective annual interest rate of 13 percent. What is the equivalent 18-month interest rate on this loan? Note I don\'t want the APR. I want the EPR (the actual interest rate charged over 18 months) (Click to select)

Solution

Effective rate for 18 months = (1 + annual rate)^(1/18) - 1

= (1 + 0.13)^(1/18) - 1

= 1.0068129719 - 1

= 0.0068129719

Equivalent 18-month interest rate = 0.0068129719 x 18

= 0.1226334942

= 12.263%