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philliesgirl23
Bob opened a credit card at a department store with an APR of 23.99% compounded monthly. What is the APY on this credit card? 26.81% 2.00% 47.98% 32.91%
Without calculations, it seems to me that 26.81 is the right answer, because APY is usually a little higher than APR. Let's check: For a year, there are 12 compoundings, and each time the rate of interest is 23.99%/12 So APY=(1+0.2399/12)^12-1 = 0.2681 yay!