Effective annualized cost

[dm23]

All in annual rate of 5.25% for one month loan of $2mm -
I thought it would be ((1+(5.25/12))(^12) - 1 = 5.38% for the formula of EAR, but that is incorrect.
Says it should be (2mm * 5.25% * 1/12)) / 2mm * (1-5.25% * 1/12) = 5.27%
Can someone explain why this might be the case?

 

[Oscar]

The question is not asking for the effective annual yield but for the rate regarding the all-in costs of a loan. That’s a total different thing and has nothing to do with compounding.
Regards,
Oscar

 

[dm23]

Ah. Thanks!