Question 22.40

10. You receive an offer for a credit card with 0% fixed APR for the first 12 months, after which the card would have one of several rates depending on credit history. The highest rate was a 22.74% APR (and the company reserves the right to change the APR “at any time for any reason”).

  1. What is the corresponding daily interest rate for the 22.74% APR?
  2. What is the effective annual rate (EAR)?