A credit card issuer offers an APR of 13.64% and compounds interest daily. which is it most likely to advertise, its APR or its

Question

3 years ago

10

A credit card issuer offers an APR of 13.64% and compounds interest daily. which is it most likely to advertise, its APR or its

effective interest rate?
A. it's APR, because it's 0.97% less than its effective interest rate.
B. it's APR, because it's 0.97% greater than the effective interest rate.
C. it's effective interest rate, because it's 0.97% less than the APR

Mathematics

2 answers:

Minchanka [31] · Answer 1 · 2022-05-12T22:38:47+03:00

Minchanka [31]3 years ago

8 0

Answer:A

Step-by-step explanation:

A

nirvana33 [79] · Answer 2 · 2022-05-12T21:25:02+03:00

To find the effective interest rate the formula is
R=(1+r/k)^(k)-1
R=?
r=nominal Interest rate 0.1364
K=compounded daily 365
Plug in the formula
R=(1+0.1364÷365)^(365)−1
R=0.1461 This the effective interest rate 14.61%
As you can see that the effective interest rate is greater than the nominal interest rate by
0.1461−0.1364=0.0097×100=0.97%

So the answer is a

Hope it helps!