wikiHow Calculating Effective Interest Rate Practice Problems 1. You deposit $10,000 into a savings account that earns 2% interest annually, compounded monthly. What is the effective annual interest rate? 2. A bond with a face value of $1,000 pays 6% interest annually and matures in 5 years. If the bond is purchased for $950, what is the effective annual interest rate? 3. A loan of $5,000 is charged 8% interest compounded quarterly over a 3-year term. What is the effective annual interest rate? 4. An investment earns 5% interest compounded weekly. What is the effective annual interest rate? 5. A mortgage with a balance of $250,000 is charged 4.5% interest compounded monthly over a 30-year term. What is the effective annual interest rate? 6. A credit card charges 1.5% interest per month on a balance of $2,000. What is the effective annual interest rate? 7. An annuity pays $500 per month for 10 years, with payments beginning one month from now. If the interest rate is 6%, what is the present value of the annuity? 8. A loan of $20,000 is charged 10% interest compounded monthly over a 5-year term. What is the effective annual interest rate? 9. An investment earns 12% interest compounded annually. What is the effective annual interest rate? 10. A certificate of deposit with a face value of $5,000 is sold for $4,800 and matures in 2 years. What is the effective annual interest rate? 11. A savings account with a balance of $1,000 is charged 3% interest compounded quarterly. What is the effective annual interest rate? 12. An investment earns 7% interest compounded daily. What is the effective annual interest rate? 13. A car loan of $15,000 is charged 6.5% interest compounded monthly over a 4-year term. What is the effective annual interest rate? 14. A personal loan of $7,500 is charged 12% interest compounded quarterly over a 3-year term. What is the effective annual interest rate? 15. A bond with a face value of $10,000 pays 7% interest annually and matures in 10 years. If the bond is purchased for $9,500, what is the effective annual interest rate? Page