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17 July, 18:39

Your credit card company quotes you an interest rate of 21.9 percent based on annual compounding. Interest is billed monthly. What is the actual rate of interest you are paying

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  1. 17 July, 22:13
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    Answer:24.24%

    Explanation:

    Effective Annual Rate = (1 + (nominal interest rate / number of compounding periods)) ^ (number of compounding periods) - 1

    EAR = [1 + (.219 / 12) ]12 - 1 =.2424, or 24.24 %
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