A Loan For A New Car Costs The Borrower 0.8% Per Month. What Is The Ear?

 To calculate the Effective Annual Rate (EAR) from a monthly interest rate, we need to use the formula for converting the periodic rate to an annual rate. The formula for EAR is:

$���=(1+�{)}^{12}-1$

Where:

• $�$ is the monthly interest rate (expressed as a decimal).

Given that the monthly interest rate $�$ is 0.8% (or 0.008 as a decimal), we can plug this value into the formula:

$���=(1+0.008{)}^{12}-1$

$���=(1.008{)}^{12}-1$

$���\approx 0.010123$

So, the Effective Annual Rate (EAR) for a loan with a monthly interest rate of 0.8% is approximately 1.0123, or 1.23% when expressed as a percentage.