Master Card and other credit card issuers must by law print the Annual Percentage Rate (APR) on their monthly statements. If the

Question

3 years ago

10

APR is stated to be 24.50%, with interest paid monthly, what is the card's EFF%?

1 answer:

larisa86 [58] · Answer 1 · 2022-04-28T21:43:22+03:00

Answer:

The EFF of card is 27.45%.

Explanation:

EFF interest rate is an interest rate which is actually paid or received on debt or investment. It is also known as Effective Interest rate.

APR = 24.50%

EFF = ( ( 1 + r/m )^m ) - 1

EFF = ( ( 1 + 0.245/12 )^12 ) - 1

EFF = ( ( 1 + 0.020417 )^12 ) - 1

EFF = ( ( 1.020417 )^12 ) - 1

EFF = 1.27447765 - 1

EFF = 0.2745

EFF = 27.45%