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Tju [1.3M]
3 years ago
5

Edith opened a credit card at a department store with an APR of 23.73% compounded daily. What is the APY on this credit card?

Mathematics
1 answer:
lorasvet [3.4K]3 years ago
6 0
The effective annual rate is
  (1+r/n)^n -1
where r is the nominal rate and n is the number of compoundings per year.

You have r = 0.2373 and n=365, so the APY is
  APY = (1 +0.2373/365)^365 -1 ≈ 26.77%
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