document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=696569>Question 696569</A>: <I><SPAN STYLE=\"word-break: break-all;\"> You have seen a credit card advertisement stating that the annual percentage rate is 12 percent. If the credit card requires monthly payments, what is the effective annual rate of interest on the loan? </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #429125 by </B><A HREF=/tutors/aboutme.mpl?userid=jim_thompson5910><B>jim_thompson5910(35256)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=jim_thompson5910><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/images/nopicture.jpg><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=429125\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> EAR = Effective Annual Rate<BR>\n" );
document.write( "i = annual interest rate<BR>\n" );
document.write( "n = number of compounding periods\r<BR>\n" );
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document.write( "EAR = (1 + i/n)^n - 1\r<BR>\n" );
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document.write( "EAR = (1 + 0.12/12)^12 - 1\r<BR>\n" );
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document.write( "EAR = (1 + 0.01)^12 - 1\r<BR>\n" );
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document.write( "EAR = (1.01)^12 - 1\r<BR>\n" );
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document.write( "EAR = 1.12682503013197 - 1\r<BR>\n" );
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document.write( "EAR = 0.12682503013197\r<BR>\n" );
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document.write( "Multiply this by 100 to get 12.68%\r<BR>\n" );
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document.write( "So the effective annual rate is 12.68% </SPAN>\n" );
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