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Nat7aAngel1grahing
Nat7aAngel1grahing Nat7aAngel1grahing
  • 23-09-2016
  • Business
Answered

A credit card had an APR of 16.42% all of last year and compounded interest daily. What was the credit card's effective interest rate last year?

Verified Answer :

Robinstewart12 Robinstewart12
  • 04-10-2016

To calculate the effective interest rate you'll need the following formula.
(1+ APR / n ) ^n -1 *100.
IT looks alot harder than it is.
APR has to be expressed as a decimal, so 0.1642.
n is the period. as it is daily, n=365.

1+(0.1642/365) to the power of 365. will give you 1.1784.... 
Minus 1, and times by 100 to get it as a percentage = 17.84%


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Sophiajg12 Sophiajg12
  • 02-12-2019

17.84% ................

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