Question

*CORRECT ME ! [WORK IS SHOWN]

Hamlet opened a credit card at a department store with an APR of 17.85% compounded quarterly. What is the APY on this credit card?

35.70%

23.65%

19.08% <----- MY CHOICE

4.46%
--------
17.85%/4 = 0.044625 N=4
APY=(1+P)^(n)-1
APY=(1+0.044625)^(4)-1
APY=(1.044625)^(4)-1
APY=1.1908-1
APY=0.1908
APY=19.08%

Answer 1

That all looks correct to me!

Answer 2

B(1+apr/12)^12 = B(1+apy)

(1+apr/12)^12 = 1+apy

(1+apr/12)^12 - 1 = apy

Answer 3

Why would it be apr/12? Wouldn't that be if it was compounded monthly?

Answer 4

yes, yes it would be .... missed the quarterly info :)

Answer 5

but even at /12 we get 19.38