Question

Isaiah borrowed money from his bank and is charged a 1.65% monthly interest rate with no other fees. What is Isaiah's annual percentage rate (APR) on the loan? Assume 12 equal months.

a) 1.65%
b) 19.80%
c) 20.22%
d) 21.40%

Answer 1

Isaiah's annual percentage rate (APR) on the loan is 19.9%.

Step-by-step explanation:

To calculate Isaiah's annual percentage rate (APR), we need to find the equivalent annual rate for the given monthly interest rate of 1.65%. Here's the step-by-step calculation:

1. Add 1 to the monthly interest rate: 1 + 0.0165 = 1.0165
2. Raise the result to the 12th power because there are 12 months in a year: (1.0165)^12 = 1.199
3. Subtract 1 from the result and multiply by 100 to convert it to a percentage: (1.199 - 1) * 100 = 19.9%

Therefore, Isaiah's annual percentage rate (APR) on the loan is 19.9%.