RatedrillEffective rate with daily compounding
A time value of money problem from Ratedrill. Solve it with one answer box, with fresh numbers on every attempt and the formula, calculator keystrokes and Excel version in the worked answer, and it is checked the moment you submit.
The task
A short-term business line of credit charges 8.25% APR, compounded daily on a 365-day year. What is the effective annual rate?
What this problem teaches
Use the interest conversion worksheet (ICONV) with C/Y = 365.
A hint if you get stuck
EAR = (1 + APR / 365)^365 - 1.
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