Question

Carl Cornfield has a short term loan at 18% interest per year. He pays the interest monthly and wants to know the annual percentage rate? APR (to the nearest tenth) = 1.5 2.0 15.0 19.6

Answer 1

Hi there

APR=(1+r/12)^(12)-1
APR=((1+0.18÷12)^(12)−1)×100
APR=19.6%

Hope it helps

Answer 2

Answer: 19.6 % (approx)

Step-by-step explanation:

Since, the annual percentage rate (APR) is defined as,

$APR=(1+\frac{i}{n})^n-1$

Where, i = Stated annual interest rate,

n = Number of periods,

Here, i = 18% = 0.18

n = 12 months,

$\implies APR=(1+\frac{0.18}{12})^{12} - 1$

$=(1+0.015)^{12}-1$

$=1.19561817146-1$

$=0.1956187146$

$=19.56187146\% \approx 19.6\%$