Answer: 19.56%
Explanation:
Effective Rate of Return is the rate that takes into account, the compounding influence of interest rates in a given period.
It is calculated with the formula,
= ( 1 + r/n) ^ n - 1
Where
r = APR
n = no of compounding periods in a year
Interest is paid monthly so nnumber of periods will be 12.
Therefore,
EFF = ( 1 + 18%/12)¹² - 1
EFF = 19.56%
