Question #259859
If you pay 1.5% per month on the out standard balance of your master card bill what effective annual rate you being charged?
Expert's answer
Monthly: i = r/M
= 1.5%/12
=0.125%
Effective annual rate i a=(1 + r/M)M -1
Therefore; i a =(1 + 0.000125)12 - 1
=1.001501 - 1
=0.001501
=0.15%
