Question

A credit card advertises an annual interest rate of 23%. What is the equivalent monthly interest rate? I =

Answer 1

The monthly interest rate is approximately 0.0192 or 1.92%

Explanation:

To find the equivalent monthly interest rate II from the given annual interest rate A, you can use the formula:

I=a/n

Where n is the number of compounding periods per year. For monthly compounding, n would be 12.

In this case, with an annual interest rate A of 23%, the equivalent monthly interest rate "I" would be:

I=23%/12

I=0.23/12

I=0.0192

So, the equivalent monthly interest rate is approximately 0.0192 or 1.92%