15.79 % is the rate that bank is requred to give to potential borrowers
Explanation:
[tex]\mathrm{EAR}=(1+\mathrm{APR} / \mathrm{m})^{\mathrm{m}}-1[/tex]
[tex]A P R=m\left[(1+E A R)^{1 / m}-1\right][/tex]
[tex]\mathrm{APR}=365\left[(1+.171)^{1 / 365}-1\right][/tex]
[tex]A P R=365\left[(1.171)^{0.00273972602}-1\right][/tex]
[tex]\mathrm{APR}=365 *[1.00043258-1][/tex]
[tex]A P R=365 * 0.00043258[/tex], APR = 0.1578917
Or 15.79% (it is rounded off )
Where:
EAR = effective annual rate
APR = Annual percentage rate
M = number of compounding
Therefore, the interest of rate that the bank is required by law in order to report to all the potential borrowers is 15.97%
