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What is the APR on a loan that charges interest at the rate of 1.4% per month?

a. 14.00%
b. 18.16%
c. 10.20%
d. 16.80%

User Demurgos
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1 Answer

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Final answer:

The APR on a loan that charges 1.4% interest per month is found by multiplying the monthly rate by 12, giving an APR of 16.80%.

Step-by-step explanation:

The Annual Percentage Rate (APR) is a measure commonly used to compare borrowing costs, which includes interest and other charges that may apply to the loan. To calculate the APR based on a monthly interest rate, we would need to annualize the given monthly rate. Since the problem states an interest rate of 1.4% per month, we can calculate the APR by multiplying this monthly rate by 12 (the number of months in a year).

The calculation would be as follows:
APR = Monthly Interest Rate × Number of Months in a Year
APR = 1.4% × 12
APR = 16.8%

Therefore, the correct answer is (d) 16.80%.

User Nellius
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