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Your credit card company charges you 1.45 percent per month. what is the annual percentage rate on your account? 16.67 percent 16.79 percent 17.40 percent 18.00 percent 18.86 percent

Respuesta :

Let x = the principal amount.

Value after 1 month = x(1 + 0.0145) = x*1.0145
Value after 2 months = x*1.1045²
...
Value after 12 months = x*1.1045¹² = 1.1886x

Interest paid = 1.1886x - x = 0.1886x
Annual percent interest = 100*(0.1886x/x) = 18.86%

Answer:  18.86%

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