Your credit card offers you a promotional APR of $29\%$ per year, which of course involves monthly

compounding $($it is in the tiny letters$).$ Let$$s see if we learned something this week: suppose that

you have a balance of $$1,000.$

$1.$ What is the monthly interest rate that you are charged?

$2.$ If you do not pay your credit card at all for a year, what would be the ending balance

$($remember$,$ monthly compounding$)?$ What is the holding period return for the bank $($or the

actual cost to you$)?$

$3.$ What is the effective annual rate of your credit card?

Answer rating: 100% (QA)

1 To find the monthly interest rate charged well first convert the annual percentage rate APR to a m... View the full answer