Calculus with Applications (10th Edition)

Published by Pearson
ISBN 10: 0321749006
ISBN 13: 978-0-32174-900-0

Chapter 2 - Nonlinear Functions - 2.6 Applications: Growth and Decay; Mathematics of Finance - 2.6 Exercises - Page 107: 1

Answer

Stated interest rate (nominal or the annual interest rate) is the annual rate on your saving accounts or loan. Effective interest rate is the true rate you earn on a loan. The biggest difference is a stated interest rate does not take the effect of compounding interest into account.

Work Step by Step

Stated interest rate (nominal or the annual interest rate) is the annual rate on your saving accounts or loan. Effective interest rate is the true rate you earn on a loan. The biggest difference is a stated interest rate does not take the effect of compounding interest into account.
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