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A loan disclosure, as required by law, states that a credit card has

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a loan disclosure, as required by law, states that a credit
card has an interest rate of 14.9 percent. Interst is
compounded on a daily basis. What is the effective annual
rate?
Solution
we can assume 360 or 365 days for daily compounding, i
assumed 360 days.
Effective annual rate = (1+(14.9%/360))^360
= (1+(0.149/360)^360 = (1+0.0004)^360 = 16.0637% 0r
16.06%

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a loan disclosure, as required by law, states that a credit card has an interest rate of 14.9 percent. Interst is compounded on a daily basis. What is the effective annual rate? Solution we can assume 360 or 365 days for daily compounding, i assumed 360 days. Effective annual rate = (1+(14.9%/360) ...
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