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7 November, 03:36

A credit card company advertises an APR of 15.3%, compounded daily. What

is the effective interest rate? Round your answer to two decimal places.

O A. 15.76%

O B. 16.53%

O c. 15,50%

O D. 16.47%

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Answers (1)
  1. 7 November, 04:19
    0
    B. 16.53%

    Explanation:

    The effective interest rate is the real interest rate charged by a bank or any other type of lender on a loan.

    the formula to calculate effective interest rate = r = (1 + i/n) ⁿ - 1

    i = 15.3% n = 365 days

    r = [1 + (15.3%/365) ³⁶⁵] - 1 = 1.00419178³⁶⁵ - 1 = 1.165287621 - 1 = 0.165287621 ≈ 16.53%
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