Question

Your monthly statement from your bank credit card shows that the monthly rate of interest is 1.5%. What is the annual effective rate of interest you are being charged on your credit card

Answer 1

i believe your annual rate of interest is 19.56%

Step-by-step explanation:

I just answered that question

Answer 2

the effective annual rate of interest is 19.56%

Step-by-step explanation:

The computation of the annual effective rate of interest is shown below:

Since the monthly rate of interest is 1.5%

So,

Annual interest is

= 1.5 % × 12 months

= 18 %

Now

Effective annual rate of interest is

= ( 1 + 0.18 ÷ 12)^12 - 1

= 0.1956

= 19.56 %

hence, the effective annual rate of interest is 19.56%