Answer:
29.5%
Explanation:
Effective interest rate is the actual interest rate that a investor receives on invesment or a borrower pays on loan including the compounding effect.
APR = (80 - 75) / 75 = 0.067 = 6.67%
Effective interest rate = ( 1 + APR )^n - 1
Effective interest rate = ( 1 + 6.67% )^4 - 1
Effective interest rate = ( 1.0667 )^4 - 1
Effective interest rate = 1.2947 - 1
Effective interest rate = 0.2947
Effective interest rate = 29.5%
