Question

-Debbie opens a credit card with an APR of 12.17% compounded monthly. How much is charged in interest this month if her balance is $950?

A-$9.63
B-$12.17
C-$79.17
D-$115.62
-Edward opened a credit card at a department store with an APR of 16.42% compounded semiannually. What is the APY on this credit card?
A-17.09%
B-32.84%
C-35.54%
D-8.21%

Answer 1

Debbie has to pay $9.63 interest. APR is 12.17/12% per month. After one month the interest is 950×0.1217/12=$9.63.
16.42% is 8.21% semiannually (answer A).
Edward’s annual interest is (1+0.0821)²-1=1.1709-1=0.1709 or 17.09% (answer A).