The effective annual rate (ear) for savings accounts with a stated apr of 5% compounded daily is closest to 5.13%.
i = 5%/365 = 0.0137%
n = 365
EAR = (1 + 0.000137)³⁶⁵ - 1
EAR = 1.0513 - 1
EAR = 0.0513
EAR = 5.13%.
The formula for the effective interest rate is EAR = {(1 + i/n)^n - 1} . * 100. where i is the nominal interest rate as a decimal number and n is the number of compounding periods per year. 02/02/2022
Compound interest every 6 months means that the interest is calculated every 6 months, that is every half year. Therefore, the effective annual rate of 10% compounded semi-annually is 10.25%. ]
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