Question

Using a calculator and the formula above, calculate the APR. Choose the correct answer. Betty Buyer has a short term note at 16% interest per year. To the nearest tenth, APR = %.

Answer 1

APR=((1+0.16÷12)^(12)−1)×100=17.2%

Answer 2

APR for the given given credit rate of 16% is 17.23%

Explanation:

Rate of Credit = 16%

Time = 1 year = 12 months

Now, for calculating the APR or Annual Principal Rate for the given credit rate , we use the formula given by :

`APR = [(1-(Rate)/(12* 100))^(Time)-1]* 100\\\\APR =[ (1 - (16)/(1200))^(12)-1]* 100\\\\APR = [1.1723-1]* 100\\\\\implies\bf APR=17.23\%`

Hence, APR for the given given credit rate of 16% is 17.23%