Gretchen just got a new credit card that offers an introductory APR of 4.8% for the first 4 months and a standard APR of 15.6% thereafter. If interest is compounded monthly, what is the periodic interest rate during the first 4 months?

A newly institution question and answer requested students to tell what they think is the main important thing for a student to do in order to obtain success. The one that response stood out from the rest was practice. People who generally are successful do not become successful by being born. They work hard and persistence their lives to succeeding. This is how you can fulfill your goals. Below some question and answer examples that you will possibly benefit from to further enhance your knowledge and gain insight that will guide you to continue your school studies.

Question:

Gretchen just got a new credit card that offers an introductory APR of 4.8% for the first 4 months and a standard APR of 15.6% thereafter. If interest is compounded monthly, what is the periodic interest rate during the first 4 months?

A. 0.4%
B. 0.3%
C. 1.2%
D. 1.6%

Answer:

We have this formula APR = (Periodic Rate) × (Number of Periods) to get the APR and since it’s annual, the number of periods is 12. The question asked about the periodic rate for the first 4 months so relatively, 15.6 is not included in our solution.

We then substitute the known values to the equation to get 

4.8 = (Periodic Rate) × (12)
Periodic Rate then is 0.4 which the answer is letter A: 0.4%. 

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