A CREDIT CARD COMPANY SENDS YOU A PROMOTION THAT SAYS IT WILL CHARG...

3. - EXAM SOLUTION 8 FUNDAMENTALS OF CORPORATE FINANCE, 4TH EDITION BREALEY
EXAM SOLUTION 8 FUNDAMENTALS OF CORPORATE FINANCE, 4TH EDITION BREALEY

3. A credit card company sends you a promotion that says it will charge you an

interest rate of 1.25% monthly. In this case the annual percentage rate (APR) is

____ and the effective annual rate (EAR) is _______ and if I carried a $300

balance throughout the year I would owe _______ at the end of the year.

A) 16.08%; 15.00%; $348.24

B) 15.00%; 14.55%; $345.00

C) 14.55%; 15.00%; $345.00

D) 15.00%; 16.08%; $348.24