Question

Herman opened a credit card at a department store with an APR of 24.45% compounded semiannually. What is the APY on this credit card?

Answer 1

assume a balance of 100, what do you get for the balance at the end of the year when compounding?

Answer 2

semiannually means 2 times a year

the stated APR is for 1 year, so half it to the period rate

Answer 3

i get 125.94

Answer 4

but i still dont know how to find apy

Answer 5

125.94 is good; subtract the original 100

Answer 6

or look at it this way: APY is simple interest

100(APY) = 125.95

Answer 7

25.94 is the apy?

Answer 8

yep

Answer 9

awesome