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    This posting discusses EAR and APR

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    What is the difference between the annual percentage rate (APR) and the effective annual rate (EAR)? Which rate do you believe is more relevant for financial decisions and why?

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    The annual percentage rate is the rate that is charged for borrowing the money. The APR is what it costs the consumer to borrow the stated amount over the term of the year. The APR is always stated as a percentage. Examples would be securing a $200,000 home loan at 4% APR, or securing a $10,000 business loan at 5% APR. The APR is paid annually on the amount of the ...

    Solution Summary

    The solution discusses the difference between annual percentage rate and effective annual rates, including which is more beneficial to the consumer.