3.2 If your credit card calculates interest based on 19.25% APR, compounded monthly: (a) What are...

Question

Question

3.2 If your credit card calculates interest based on 19.25% APR, compounded monthly: (a) What are your monthly interest rate

Answer 1

Answer #1

a. Monthly interest rate = 19.25 / 12 = 1.6042% per month

Effective monthly interest rate = (1+0.016042)^12 - 1

= 1.21042593 - 1

= 0.210426 ~ 21.04%

b.

Balance after 4 months = 3400 * (1+0.016042)^4 = 3400 * (1.016042)^4 = 3400 * 1.06572865 = 3623.48

Answer 2

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