EAR vs quaterly compounding
I tried to calculate the loan payments for a 5 year loan of a total of 50k with an annual rate of 9% compounded quarterly using two methods:
1st→Calculating the EAR = 9.31%, then getting the annual payment = 12957.6 and then dividing by 4, so the quarterly payment is 3239.4
2nd→Introducing 20 periods in the BAII plus (5 years X 4 quarters) and a quarterly rate of 9/4 = 2.25%. that results in a quarterly payment of 3132.1
Why are the results different? Shouldn’t they be the same?
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