You are paying an effective annual rate of 12.68% on your credit card.The interest is compounded monthly.What is the annual percentage rate on your account?

Question

Quizplus · Accepted Answer

The annual percentage rate (APR) is the nominal rate, which can be calculated using the formula for effective annual rate (EAR): $ (1 + \frac{APR}{n})^n - 1 = EAR $. Solving for APR with EAR = 12.68% and n = 12 gives approximately 12.00%.

You Are Paying an Effective Annual Rate of 12