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starrhunter

Herman opened a credit card at a department store with an APR of 24.45% compounded semiannually. What is the APY on this credit card?

  • 11 months ago
  • 11 months ago

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  1. amistre64
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    assume a balance of 100, what do you get for the balance at the end of the year when compounding?

    • 11 months ago
  2. amistre64
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    semiannually means 2 times a year the stated APR is for 1 year, so half it to the period rate

    • 11 months ago
  3. starrhunter
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    i get 125.94

    • 11 months ago
  4. starrhunter
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    but i still dont know how to find apy

    • 11 months ago
  5. amistre64
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    125.94 is good; subtract the original 100

    • 11 months ago
  6. amistre64
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    or look at it this way: APY is simple interest 100(APY) = 125.95

    • 11 months ago
  7. starrhunter
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    25.94 is the apy?

    • 11 months ago
  8. amistre64
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    yep

    • 11 months ago
  9. starrhunter
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    awesome

    • 11 months ago
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