IF THE EAR IS KNOWN TO BE 14.75% ON A DEBT THAT HAS QUARTERLY PAYM...

10. If the EAR is known to be 14.75% on a debt that has quarterly payments, what is the APR on the debt? A) 3.50% B) 3.69% C) 14.00% D) 14.73% E) 15.60% Solution C APR/m (or i

_m

) = (1 + EAR)

^1/m

-1 The quarterly interest rate = (1.1475)

^1/4

-1 = 3.50% APR = i

_m

x m So the APR = 0.0350 × 4 = 14.00%.