-Ricky Ripov’s Pawn Shop charges an interest rate of 15.25 percent per month on loans to its customers. Like all lenders, Ricky must report an APR to consumers.

What rate should the shop report? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Annual percentage rate %

What is the effective annual rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Effective annual rate %

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andromache andromache · Answer 1 · 2020-02-12T04:41:00+01:00

Answer:

183.00%

449.15%

Explanation:

The computation of annual percentage rate and the effective annual rate shown below:

Annual percentage rate is

= Interest rate per month × Total Number of months in a year

= 15.25% × 12 months

= 183.00%

The effective annual rate is

= (1 + nominal interest rate ÷ periods)^ number of period - 1

= (1 + 15.25% ÷ 12)^12 - 1

= 449.15%

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abiolataiwo2015 abiolataiwo2015 · Answer 2 · 2022-04-01T12:19:55+02:00

The Annual percentage rate is 183% and the effective annual rate is 449.15%.

Annual percentage rate = Interest rate × Total Number of months in a year

Annual percentage rate= 0.1525 × 12 months×100

Annual percentage rate= 183%

Effective annual rate= (1 + Nominal interest rate )^ number of period - 1

Effective annual rate= (1 + 0.1525)^12 - 1

Effective annual rate= (1.1525)^12 - 1

Effective annual rate=5.4915-1

Effective annual rate=4.4915×100

Effective annual rate= 449.15%

Inconclusion the Annual percentage rate is 183% and the effective annual rate is 449.15%.

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