If you borrow money at .75% per month, what is the APR for that loan?

If you borrow money at .75% per month, what is the APR for that loan?

• A. 6%
• B. 9%
• C. 12%
• D. 3%

Answer: (B)

APR is the annual rate expressed for a year. If the loan charges 0.75% per month, you convert to a yearly rate by multiplying by 12, giving 0.75% × 12 = 9% per year. This reflects the nominal APR, assuming simple annualization and no monthly compounding. If you wanted the exact effective rate with monthly compounding, it would be (1 + 0.0075)^12 − 1 ≈ 9.38%, but the common test assumption for APR is the straightforward 9%. So the best answer is 9%.

APR is the annual rate expressed for a year. If the loan charges 0.75% per month, you convert to a yearly rate by multiplying by 12, giving 0.75% × 12 = 9% per year. This reflects the nominal APR, assuming simple annualization and no monthly compounding. If you wanted the exact effective rate with monthly compounding, it would be (1 + 0.0075)^12 − 1 ≈ 9.38%, but the common test assumption for APR is the straightforward 9%. So the best answer is 9%.