Is there a difference between effective interest rate and annual effective int?

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  • July 26, 2014 at 5:06 pm #187244
    mdcpa89
    Member

    Can someone please explain the calculation for effective interest rate for 2/10 n30? Is the annual effective rate the same thing as effective rate of interest? Thank you

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  • July 26, 2014 at 5:49 pm #582809
    M.O.D.
    Member

    2/98 x 365 days in year / (30-10) the difference in payment times = 37.42%

    Just memorize this formula. It is difficult to derive.

    Yes annual effective is the same as effective. I suppose one could calculate monthly effective, day effective too.

    BA Mathematics, UC Berkeley
    Certificates in CPA and EA preparation, College of San Mateo
    CMA I 420, II 470
    FAR 91, AUD Feb 2015 (Gleim self-study)

    July 27, 2014 at 5:10 pm #582810
    mdcpa89
    Member

    Thank you very much.

    July 28, 2014 at 1:31 pm #582811
    Anonymous
    Inactive

    Off topic, but I'm curious – why do you have FAR scheduled so far out? 4 months seems like a long time to study for even FAR.

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