Question

A credit card advertises an annual interest rate of 23%.

What is the equivalent monthly interest rate?

Answer 1

Given:

A credit card advertises an annual interest rate of 23%.

To find:

The equivalent monthly interest rate.

Solution:

We know that,

1 year = 12 months

It is given that, the credit card advertises an annual interest rate of 23%. So, the equivalent monthly interest rate is:

`(23\%)/(12)=1(11)/(12)\%`

`(23\%)/(12)\approx 1.9167\%`

Therefore, the equivalent monthly interest rate is
`1(11)/(12)\%` and the approximate equivalent monthly interest rate is 1.9167%.