Question

Mr. miser loans money at an annual rate of 15 percent. interest is compounded daily. what is the actual rate mr. miser is charging on his loans?

Answer 1

To solve use the effective annual rate method:

Effective Annual Rate

= (1 + Periodic Rate)^Number of periods in a year - 1

= (1 + 0.15 / 365)^365 - 1

= 16.18%