Question

A credit card advertises an annual interest rate of 23%.

What is the equivalent monthly interest rate?

Answer 1

Its 1.91666666667
because
all you are doing is finding the monthly interest rate
so
divide by 12
because
there are 12 months in a year
and
you have your answer
hope this helps!

Answer 2

What is the equivalent monthly interest rate?

If 23% is compounded each month, there will be 12 intervals and then the monthly rate is:

23 ÷ 12 = 1.92 %

If 23% is compounded annually, then the monthly rate would be:

Rate = (1 + 23%)⁰°⁸³³ (power is 0.833 or 1/12)

= 1.23⁰°⁸³³ (power is 0.833 or 1/12)

= 1.0174 - 1 x 100

= 1.74 %