A credit card account that charges interest at the rate of 1.25 percent per month would have an annually compounded rate of _______ and an APR of _______. A)16.08 percent; 15.00 percent B)14.55 percent; 16.08 percent C)12.68 percent; 15.00 percent D)15.00 percent; 14.55 percent Annually compounded rate = (1.0125)¹²-1 = 16.08%

Question

Quizplus · Accepted Answer

To find the annually compounded rate, we can use the formula: 
(1 + monthly interest rate)^12 - 1 
= (1 + 0.0125)^12 - 1 
= 0.1608 
Multiplying by 100 to get the percentage, we get 16.08%.

To find the APR, we can simply multiply the monthly interest rate by 12: 
0.0125 x 12 = 0.15 
Multiplying by 100 to get the percentage, we get 15.00%.

Therefore, the answer is A.

A Credit Card Account That Charges Interest at the Rate