Question

Eduardo opened a credit card at a department store with an APR of 22.29% compounded semiannually. What is the APY on this credit card? (2 points) a 44.58% b 11.15% c 23.53% d 49.55%​

Answer 1

The correct option is c. 23.53%.

Explanation:

The annual percentage yield (APY) can be calculated using the following formula:

APY = (1 + r / n)^n - 1 .............................. (1)

Where;

APY = Annual percentage yield = ?

r = Annual percentage rate = 22.29%, or 0.2229

n = Number of compounding period per year = Semiannually = 2

Substituting the values into equation (1), we have:

APY = (1 + 0.2229 / 2)^2 - 1

APY = 0.2353211025, or 23.53211025%

Rounding to 2 decimal places, we have:

APY = 23.53%

Therefore, the correct option is c. 23.53%.