A credit card issued by the GECU credit union has an APR of 16% and an APY of 16.64%. (a) What is the compounding period? (b) Use the EFFECT function to find the compounding period.

What will be an ideal response?


(a) 0.1664 = (1 + 0.16/m)? – 1
By trial and error, m= 2
Compounding period = 6 months

(b) = EFFECT(16%,n)
By trial and error to display 16.64%
m = 2; CP = 6 months

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