Question

Dinah just got a new credit card that offers an introductory APR of 7.2% for the first 3 months and a standard APR of 19.2% thereafter. If interest is compounded monthly, what is the periodic interest rate during the first 3 months?

A. 0.4%
B. 2.4%
C. 1.2%
D. 0.6%

@ganeshie8 @Luis_Rivera @jdoe0001 @samsterz @e.mccormick@ganeshie8 @Jlynn89

Answer 1

"what is the periodic interest rate during the first 3 months?" well, you can ignore the 19.2 completely.

Did yyou get a formula for converting APR to periodic?

Answer 2

7.2

Answer 3

7.2 is the rate you need to work with. But did you get a formula for converting it to periodic?

Answer 4

APR = (Periodic Rate) \(\times\) (Number of Periods)

Answer 5

7.2 * 3?

Answer 6

@e.mccormick

Answer 7

Well, they gave you what? 7.2, but look closer:
"introductory APR of 7.2%"

Now, because they gave you an APR, that is as if it was for the full 12 periods!

Answer 8

If they had given you a three moth rate it would be the Quarterly Percentage Rate or QPR. They gave you an Annual Percentage Rate, or APR. You may only get it for 3 months, but it is still APR! The 3 is in there to confuse you! Be careful and do not use the 3!

Answer 9

soo 7.2*12?

Answer 10

7.2 is the APR. It goes where APR is in the formula.

Answer 11

im confused

Answer 12

oooo ok

Answer 13

See, you are given an APR which means there are 12 periods. So you put in the APR and Number of Periods, then solve for what you want: Periodic Rate.

Answer 14

0.6

Answer 15

=)

Answer 16

yay thank you

Answer 17

np. Have fun!

Answer 18

so the anwer is 0.6?