Question

What is the Annual Percentage Rate for a loan that charges 2.4% every 30 day payment period?

a. 29.2% APR.
b. 28.0% APR.
c. 24.3% APR.
d. 19.9% APR.

Answer 1

The Annual Percentage Rate (APR) for a loan that charges 2.4% every 30-day payment period is 28.8%.

Step-by-step explanation:

The Annual Percentage Rate (APR) for a loan that charges 2.4% every 30-day payment period can be calculated by multiplying the monthly rate by the number of periods in a year. There are approximately 12 periods in a year (30 days in a month multiplied by 12 months). So, the APR can be calculated as follows:

1. Convert the 2.4% monthly rate to a decimal by dividing it by 100: 2.4/100 = 0.024.
2. Calculate the annual rate by multiplying the monthly rate by the number of periods in a year: 0.024 * 12 = 0.288 or 28.8%.

Therefore, the correct answer is 28.8% APR (option b).