Step-by-step explanation:
18% compounded monthly
vs
charges 18% compounded semi-annually.
#1 is worse than #2 because...
Since the nominal rates are the same, the card with the more frequent compounding so it would have the higher effective rat.
Let's compare them!:
(1 + .18/12)^12 = 1.19562 ---> effective rate is 19.562 per annum
(1+.18/2)² = 1.1881
1.1881 has the effective rate of 18.88% per annum
(1 + /17/4)^4 = 1.18114.. --> effective rate is 18.114% per annum
18% monthly is .18 over 12 each month = 0.015/month
so every month multiply by 1.015
total cost = $607.99 * 1.01^number of months
18% semi annual = .18/2 every six months = .09 /half year
so every half year (6 months) multiply by 1.09
total cost = $607.99 * 1.09^ (number of months/6)
17% quarterly = .17/4 every 3 months = .0425 /quarter year
so every quarter year (3 months) multiply by 1.0425
total cost = $607.99 * 1.025^(number of months/3)
HOPE THIS HELPS YOU HAVE A GREAT GREAT GREAT FANTASTIC FRIDAY!
