APR Finance question *Show work*

label Business
account_circle Unassigned
schedule 1 Day
account_balance_wallet $5

If I have 2 credit cards with an APR of 10%. Card number 1 charges 0.8333% compounded monthly. Card number 2 charges 5% compounded semiannually (twice a year). Given theses APR's, what's the effective annual rates charged by these 2 credit cards?  

Apr 2nd, 2015

effective annual rate
Monthly compounding 10.471%
semiannual 10.250%

Apr 2nd, 2015

Please show how you obtained your answer.

Apr 2nd, 2015

for monthly compounding:

effective rate = (1+10% / 12)^12 - 1

for semiannual compounding:

Effective rate = (1+10% /2 )^2 -1


Best the answer..... :)

Apr 2nd, 2015

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