What is the effective interest rate for a credit card advertised at 28% interest compounded daily?...

Question

Question

What is the effective interest rate for a credit card advertised at 28% interest compounded daily?

A. 31.9%

B. 32.3%

C. 29.8%

D. 28.9%

business finance

Answer 1

Answer #1

EAR=(1+APR/m)^m-1
where m=compounding periods

=(1+0.28/365)^365-1

which is equal to

=32.3%(Approx).

Answer 2

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