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Hannah has an offer from a credit card issuer for 0% APR for the first 30 days
and 12.22% APR afterwards, compounded daily. What effective interest rate
is Hannah being offered?
A. 11.87%
B. 13.00%
C. 12.93%
D. 12.22%

Respuesta :

lcemaddux

i believe the answer is A.11.87% because interest rates tend to be lower than APR

abiolataiwo2015

If the first 30 days and 12.22% APR afterwards, compounded daily. The effective interest rate is: A. 11.87%

Effective interest rate

After 1 year the daily percentage rate is compounded for:

(365 days - 30 dyas) = 335 days

Hence:

Effective interest rate=(1+0.1222/365)^335-1

Effective interest rate=(1+0.1222/365)^335-1

Effective interest rate=(1+0.00033479)^335-1

Effective interest rate=(1.00033479)^335-1

Effective interest rate=(1.11866-1)

Effective interest rate=0.11866×100

Effective interest rate=11.87% (Approximately)

Therefore the effective interest rate is: A. 11.87%.

Learn morer about effective interest rate here:https://brainly.com/question/8098678

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