Sam Seller offers credit at 19% interest per year.
To the nearest tenth, APR = ?
To calculate the Annual Percentage Rate (APR), there are a few steps involved.
Step 1: Convert the interest rate to a decimal
Given that Sam Seller offers credit at 19% interest per year, you divide the interest rate by 100 to convert it to a decimal:
19% / 100 = 0.19
Step 2: Determine the number of compounding periods
In order to calculate the APR, we need to know the number of compounding periods in a year. Common options include annually, semi-annually, quarterly, monthly, or daily. For this example, we'll assume interest is compounded annually.
Step 3: Use the formula to calculate APR
To calculate the APR, you can use the following formula:
APR = (1 + r/n)^n - 1
where:
r is the interest rate as a decimal (0.19),
n is the number of compounding periods per year (1, as it's compounded annually).
APR = (1 + 0.19/1)^1 - 1
APR = (1 + 0.19)^1 - 1
APR = (1.19)^1 - 1
APR = 1.19 - 1
APR = 0.19
Step 4: Convert the decimal to a percentage
Finally, to express the APR as a percentage, multiply the result by 100:
APR = 0.19 * 100
APR = 19%
Therefore, the APR, to the nearest tenth, is 19%.