Question

Madeline’s credit card had an APR of 18.96% All last year, and interest was compounded periodically throughout the year. which of these statements accurately describes the effective interest rate of Madeline’s credit card last ?

Answer 1

Answer:

it was greater than 18.96% whether interest was compounded daily or monthly.

Step-by-step explanation:

Answer 2

Answer:

A. It was less than 18.96% whether interest was compounded daily or monthly.

For this case we need to find the interest compuned dauly and monthly

$i_{daily}= \frac{18.96}{365}=0.0519\%$

$i_{monthly}= \frac{18.96}{12}=1.58 \%$

So then that's the best option since both values are less than 18.96%

Step-by-step explanation:

A. It was less than 18.96% whether interest was compounded daily or monthly.

For this case we need to find the interest compuned dauly and monthly

$i_{daily}= \frac{18.96}{365}=0.0519\%$

$i_{monthly}= \frac{18.96}{12}=1.58 \%$

So then that's the best option since both values are less than 18.96%

B. It was greater than 18.96% whether interest was compounded daily or monthly.

False as we can see for option A the interest rates for the compounded time monthly and daily are less than 18.96%.

C. It was greater than 18.96% if interest was compounded daily but not if interest was compounded monthly.

False for both we have values lower than 18.96%.

D. It was less than 18.96% if interest was compounded daily but not if interest was compounded monthly.

False for both we have values lower than 18.96%.