Bank One offers to lend you $50,000 at a nominal rate of 7.1%, compounded monthly. Bank Two also offers to lend you the $50,000, but it will charge a nominal rate of 7.37%, compounded annually. What is the difference in the Effective rate of two banks and which Bank would you go to for the Loan. (Use two decimal points for difference, X.XX%) 0.03%, Choose Bank 1 0.03%, Choose Bank 2 0.04%, Choose Bank 1 0.04%, Choose Bank 2 0.0%, Same effective rate, choose Bank 1 or 2
Bank One offers to lend you $50,000 at a nominal rate of 7.1%, compounded monthly. Bank Two also offers to lend you the $50,000, but it will charge a nominal rate of 7.37%, compounded annually. What is the difference in the Effective rate of two banks and which Bank would you go to for the Loan. (Use two decimal points for difference, X.XX%) 0.03%, Choose Bank 1 0.03%, Choose Bank 2 0.04%, Choose Bank 1 0.04%, Choose Bank 2 0.0%, Same effective rate, choose Bank 1 or 2
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 14P
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![Bank One offers to lend you $50,000 at a nominal rate of 7.1%, compounded monthly. Bank Two also offers to lend
you the $50,000, but it will charge a nominal rate of 7.37%, compounded annually. What is the difference in the
Effective rate of two banks and which Bank would you go to for the Loan. (Use two decimal points for difference,
X.XX%)
0.03%, Choose Bank 1
0.03%, Choose Bank 2
0.04%, Choose Bank 1
0.04%, Choose Bank 2
0.0%, Same effective rate, choose Bank 1 or 2](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe8831647-bd1d-451d-a970-fc202fc133e9%2F6961b2ef-25d7-4f9a-9819-8193e1963583%2Fmj9tsn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Bank One offers to lend you $50,000 at a nominal rate of 7.1%, compounded monthly. Bank Two also offers to lend
you the $50,000, but it will charge a nominal rate of 7.37%, compounded annually. What is the difference in the
Effective rate of two banks and which Bank would you go to for the Loan. (Use two decimal points for difference,
X.XX%)
0.03%, Choose Bank 1
0.03%, Choose Bank 2
0.04%, Choose Bank 1
0.04%, Choose Bank 2
0.0%, Same effective rate, choose Bank 1 or 2
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