A lender charges a monthly rate of 2 per cent. What is the equivalent annual percentage rate?
A) 26.82%
B) 28.62%
C) 12.68%
D) 24%

Question

Quizplus · Accepted Answer

The equivalent annual percentage rate (APR) for a monthly rate of 2% can be calculated using the formula for compound interest: APR = (1 + monthly rate)^12 - 1. Plugging in the monthly rate of 0.02 gives APR = (1 + 0.02)^12 - 1 = 1.2682 - 1 = 0.2682, or 26.82%.

A Lender Charges a Monthly Rate of 2 Per Cent