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Question 3 1 pts The effective annual interest rate of a loan is 9.7%. The...

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Question 3 1 pts The effective annual interest rate of a loan is 9.7%. The customer needs to make 5 payments a year. The APR of the loan is ___%. [Hints/Example) Hint: First find the interest rate per period. Example: The effective annual interest rate of a loan is 7.5%. The customer needs to make 6 payments a year. The APR of the loan is ____%. Solution: Suppose the interest rate of the loan per period is r, then we have (1+r) 6-1-7.5%. Note that 7.5% is the effective interest. Add 1 to both sides of the equation (1+r)6-1=7.5%. Then we have (1+r)-1.075. Raise both sides to 1/6 power: ((1+r)61/6= 1.0751/6 Note that ((1+r)61/6= (1+r)6*1/6=(1+r) += 1+r, so we have 1+r=1.0751/6-1.0121638. Therefore r=0.01213. So APR-r*6-0.0121638*6=0.0729828-7.2983%.

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