What is the annual percentage rate if a bank charges you 7.64% compounded quarterly?

Question

Quizplus · Accepted Answer

To calculate the annual percentage rate (APR) compounded quarterly, we use the formula:

APR = (1 + (r/n))^n - 1

where r is the nominal (stated) interest rate and n is the number of times interest is compounded in a year (in this case, n = 4 for quarterly compounding). Plugging in the values given, we get:

APR = (1 + (0.0764/4))^4 - 1
    = 0.0786 or 7.86%

Therefore, the best choice is B.

What Is the Annual Percentage Rate If a Bank Charges