A consumer loan that charges 1.50% interest per month has an annual percentage rate of?

Question

A consumer loan that charges 1.50% interest per month has an annual percentage rate of
answers
18.5%
15.0%
19.56%
none of the above.

Answer 1

(1.5) ^ 12 = 1.195 and that means 19.56%

The reason why the answer is 19.56 is because if you invest $100 with an interest rate of 1.50 every month, you will get this money at the end of the year $119.56 (it is an accumulated money every month)

Example:
$100 x (1.015)^ 12 = $119.56 (the profit is $19.56) and you take this profit and devided by $100 then it will give you the interest rate per year. The above formula is a rule. You have to follow!