Annual percentage rate (APR) and effective APR
7:12
Khan AcademySal Khan
Annual percentage rate (APR) and effective APR
APR stands for Annual Percentage Rate. It's the yearly interest rate you pay on a loan or credit card. However, a credit card's advertised APR isn't the true interest rate because it compounds daily. Learn how to calculate the effective APR to find a card's true interest rate.
Feb 20, 2011
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⚠️Disclaimer: I’m using the standard formula for the future value of an ordinary annuity to show how compounding interest works. I’m not 100% sure if my calculations are correct, so if there are any mistakes, I apologize. The purpose of this video is to illustrate the power of compound interest. I’m open to corrections. Thank you. Formula Used: \t•\tFuture Value of an Ordinary Annuity: FV = P \\cdot \\frac{(1 r/n)^{n \\cdot t} - 1}{r/n} ⚡ Key Variables: \t•\tFV: Final amount at age 60 \t•\tP:
1:51
⚠️Disclaimer: I’m using the standard formula for the future value of an ordinary annuity to show how compounding interest works. I’m not 100% sure if my calculations are correct, so if there are any mistakes, I apologize. The purpose of this video is to illustrate the power of compound interest. I’m open to corrections. Thank you. Formula Used: \t•\tFuture Value of an Ordinary Annuity: FV = P \\cdot \\frac{(1 r/n)^{n \\cdot t} - 1}{r/n} ⚡ Key Variables: \t•\tFV: Final amount at age 60 \t•\tP:
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