Grant's credit card has an APR of 11.28%, and it just changed its compounding period from monthly to daily. What will happen to the effective interest rate charged to Grant?

Question

jim_thompson5910 · Answer

The formula you'll use is found on this page https://en.wikipedia.org/wiki/Effective_interest_rate The formula is $$\Large r = \left(1+\frac{i}{n}\right)^n-1$$

jim_thompson5910 · Answer

r = effective annual rate
i = nominal rate
n = compounding frequency

jim_thompson5910 · Answer

`Grant's credit card has an APR of 11.28%`
so that means
i = 11.28/100 = 0.1128

r = unknown which is what you want to find out

n = 12 for the monthly compounding
n = 365 for the daily compounding

jim_thompson5910 · Answer

let me know if that helps you get started