194k views
4 votes
A credit card company advertises an APR of 17.2%, compounded daily. What is the effective interest rate

User Mozway
by
7.5k points

1 Answer

7 votes

Answer:

18.76%

Explanation:

effective interest rate = ( 1 + periodic interest rate)^m - 1

m = number of compounding = 365

Periodic interest rate = APR / number of compounding = 17.2 / 365 = 0.0471% = 0.000471

(1 + 0.000471) ^365 - 1 = 18.76%

User Mohit Ranka
by
8.3k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories