Your credit card company charges you 1.41 percent per month. What is the APR on your credit card?

Multiple Choice

18.30%

17.61%

16.07%

16.92%

19.21%

The **APR (Annual Percentage Rate)** is the annualized version of the monthly interest rate. To convert a monthly rate to an annual rate, we use the following formula:

\[
\text{APR} = (1 + \text{monthly rate})^{12} - 1
\]

Given:
- Monthly rate = 1.41% = 0.0141

Now calculate the APR:

\[
\text{APR} = (1 + 0.0141)^{12} - 1
\]

Let me calculate that for you.The **APR** (Annual Percentage Rate) for a monthly interest rate of 1.41% is approximately **18.30%**.

The correct answer is **18.30%**.

Would you like further details or have any questions?

Here are 5 related questions:
1. How would the APR change if the monthly rate were 2%?
2. What is the formula to calculate the monthly rate from an APR?
3. How does compounding affect the APR calculation?
4. How does APR differ from effective annual interest rate (EAR)?
5. What is the difference between nominal APR and effective APR?

**Tip**: When converting monthly rates to APR, always account for compounding by raising to the power of 12.

Your credit card company charges you 1.41 percent per month. What is the APR on your credit card?

Learn how to calculate the Annual Percentage Rate (APR) for a credit card with a monthly interest rate of 1.41%. This problem demonstrates the compound interest formula and explains how to convert a monthly rate to an annualized APR, suitable for students in Grades 10-12.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation