You are comparing two credit cards to apply. Vaster Card charges you an APR of 22.4%,...

You are comparing two credit cards to apply. Vaster Card charges you an APR of 22.4%, compounded daily. Misa card charges you an APR of 22.55%, compounded monthly. Assuming 12 months in a year and 365 days in a year, which card should you get?

Question 3 Part B: Identify the correct variables for Misa

Expert Solution

You are comparing two credit cards to apply. Vaster Card charges you an APR of 22.4%, compounded daily. Misa card charges you an APR of 22.55%, compounded monthly. Assuming 12 months in a year and 365 days in a year, which card should you get?

Anwer- I will choose Misa card as because it charges me annual percentage rate (APR) monthly.Though it may seem that the rate of APR is less in vaster card but vaster card will charge APR daily which will be way too much than that of Misa's monthly compounded APR.

And in monthly compounding the Card company will charge interest Just once in a month so monthly compounding will prove to have less APY (Annual percentage yield).

Hope it helps.

Rahul Sunny answered 2 years ago

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