What is the APY on Monty's default or penalty rate if it is compounded monthly?
A)36%
B)36.99%
C)42.58%
D)48.66%

Question

Quizplus · Accepted Answer

To calculate the APY on Monty's default or penalty rate compounded monthly, we need to use the following formula: APY = (1 + (i/n))^n - 1, where i is the nominal interest rate (in this case, 24%), n is the number of compounding periods per year (in this case, 12), and ^ denotes exponentiation. Plugging in these values, we get:

APY = (1 + (0.24/12))^12 - 1
APY = (1.02)^12 - 1
APY = 0.4258 or 42.58% (rounded to two decimal places)

Therefore, the best choice is C, which corresponds to the calculated APY of 42.58%.

What Is the APY on Monty's Default or Penalty Rate