Question

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? (1 point)
35.70%
23.65%
19.08%
4.46%

Answer 1

Here's the formula for compound interest.

\( A = P \left( 1 + \dfrac{r}{n} \right) ^{nt} \)

Use P = 1, r = 17.85% = 0.1785, n = 4, and t = 1.
Then compare A with P.

Answer 2

\[(1+\frac{apr}{n})^n=1+apy\]