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OlgaM077 [116]
3 years ago
15

A credit card issuer offers an APR. of 22.08% and compounds interest daily. Which is it most likely to advertise, its APR or it’

s effective Interest rate?
Mathematics
2 answers:
Alex3 years ago
8 0
<span>Answer: The credit card issuer will show APR which is 22.08% and not effective rate of interest. This is because Effective rate, when calculated with the formula given below will come as 24.67% which is 2.59% more and hence will make customers feel that they are paying more. r = [ { (1+ i / n) ^ (n) } - 1] * 100 Where i = APR/100 n = number of compounding periods which is 365 in this case as compounding is done daily. [ { (1+ 0.2208 / 365) ^ (365) }- 1] * 100</span>
Leto [7]3 years ago
5 0

Answer:

It's APR, because it's 2.62% less than its effective interest rate.



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m∠R = 27.03°

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