American Express and other credit card issuers must by law print the Annual Percentage Rate (APR)...

American Express and other credit card issuers must by law print the Annual Percentage Rate (APR) on their monthly statements. If the APR is stated to be 14.25%, with interest paid monthly, what is the card's EFF%?

Solutions

Expert Solution

EAR = (1 + r/12)¹² - 1

EAR = (1 + 0.1425/12)¹² - 1

Effective Annual Rate = 15.22%

jeff jeffy answered 2 years ago

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