Question

The rate of intrest is always calculated on

Answer 1

Answer:

Interest rates are calculated on effective annual rates known as Annual Percentage Rate (APR). Due to the annual rate applied, this interest compounds annually. If the interest was calculated on a per month basis, it would compound every month, thereby increasing the overall liability of the amount paid as interest.

Step-by-step explanation:

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Answer 2

Answer:

Interest rates are calculated on effective annual rates known as Annual Percentage Rate (APR).

Step-by-step explanation:

Interest rates are calculated on effective annual rates known as Annual Percentage Rate (APR). Due to the annual rate applied, this interest compounds annually. If the interest was calculated on a per month basis, it would compound every month, thereby increasing the overall liability of the amount paid as interest.