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Homework answers / question archive / You just received your first credit card statement and the APR listed is 21
You just received your first credit card statement and the APR listed is 21.7%. When you look closer at the statement you see that it’s compounded daily? What’s EAR?
EAR: (1+21.7/365)^365 =
Answer:
The answer is 24.23%
Step-by-Step explanation
To calculate EAR (Effective Interest Rate), use the formula:
eAPR-1 = e0.217 - 1 = 0.2423 = 24.23%
P.S. e is the number 2.71828 (look for a key labelled "e' on your calculator). If you are using excel, use the formula "exp"
