Final answer:
To find the APY for a credit card with an APR of 23.99% compounded monthly, the formula APY = (1 + r/n)^n - 1 is used. The correct APY is approximately 26.82%, so the answer is a) 26.81%.
Step-by-step explanation:
The question is asking to calculate the Annual Percentage Yield (APY) on a credit card with an Annual Percentage Rate (APR) of 23.99% that is compounded monthly. To calculate the APY from the APR, we use the formula APY = (1 + r/n)n - 1, where 'r' is the APR expressed as a decimal, and 'n' is the number of compounding periods per year. In this case, 'r' would be 0.2399 and 'n' would be 12, since the interest is compounded monthly.
Using the formula, we calculate as follows: APY = (1 + 0.2399/12)12 - 1. After calculating, we would find that the correct APY is approximately 26.82%, which rounds to 26.81%, making option a) the correct answer.