First Bank is sending university alumni an invitation to obtain a credit card, with the name of their university written on it, for a nominal 11.9% interest per year after 6 months of 0% interest. Interest is compounded monthly. If you fail to make the minimum payment in any month, your interest rate could increase (without notice) to a nominal 23.9% per year. Calculate the effective annual interest rates the credit company is charging in both cases.
First Bank is sending university alumni an invitation to obtain a credit card, with the name of their university written on it, for a nominal 11.9% interest per year after 6 months of 0% interest. Interest is compounded monthly. If you fail to make the minimum payment in any month, your interest rate could increase (without notice) to a nominal 23.9% per year. Calculate the effective annual interest rates the credit company is charging in both cases.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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First Bank is sending university alumni an invitation to obtain a credit card, with the name of their university written on it, for a nominal 11.9% interest per year after 6 months of 0% interest. Interest is compounded monthly. If you fail to make the minimum payment in any month, your interest rate could increase (without notice) to a nominal 23.9% per year. Calculate the effective annual interest rates the credit company is charging in both cases.
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