Suppose your credit card issuer states that it charges a 19.25% nominal annual rate, but you must make monthly payments, which amounts to monthly compounding. What is the effective annual rate?   a. 21.04%     b. 19.25%     c. 20.18%     d. 20.68%     e. 20.51%

Intermediate Financial Management (MindTap Course List)
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Author:Eugene F. Brigham, Phillip R. Daves
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Chapter22: Providing And Obtaining Credit
Section: Chapter Questions
Problem 2P: Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for...
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Suppose your credit card issuer states that it charges a 19.25% nominal annual rate, but you must make monthly payments, which amounts to monthly compounding. What is the effective annual rate?
  a. 21.04%  
  b. 19.25%  
  c. 20.18%  
  d. 20.68%  
  e. 20.51%  
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