Question

You are paying an effective annual rate of 15.33 percent on your credit card. The interest is compounded monthly. What is the annual percentage rate on this account?

Group of answer choices

14.35 percent

13.90 percent

14.10 percent

13.75 percent

14.00 percent

Answer 1

EAR=[(1+APR/m)^m]-1
where m=compounding periods

0.1533=[(1+APR/12)^12]-1

(1+0.1533)=[(1+APR/12)^12]

APR=[(1+0.1533)^(1/12)-1]*12

=14.35%(Approx).