Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

10. Time Value of Money

Time Value of Money Equations

Financial Accounting

10. Time Value of Money

Time Value of Money Equations

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Multiple Choice

If a credit card has an annual percentage rate (APR) of 15.99\%, what is the monthly periodic interest rate (rounded to two decimal places)?

0.80\%

1.33\%

15.99\%

12.00\%

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Verified step by step guidance

Understand that the annual percentage rate (APR) represents the interest rate for the entire year, and the monthly periodic interest rate is calculated by dividing the APR by the number of months in a year (12).

Express the formula for the monthly periodic interest rate as:

\frac{APR}{12}

. This formula divides the annual rate evenly across all months.

Substitute the given APR value (15.99%) into the formula:

\frac{15.99}{12}

. Ensure the APR is expressed as a percentage for clarity.

Perform the division to calculate the monthly periodic interest rate. Round the result to two decimal places as specified in the problem.

Verify the calculation by checking the rounded result against the provided options (0.80%, 1.33%, 15.99%, 12.00%) to ensure the correct answer is identified.