You are considering taking out a two-year loan of$1,000 from a bank, on which you can pay eithercompound yearly interest of 1 percent or a flat rateof 2 percent for the whole two-year period. Whichoption is a better deal, and why?
You are considering taking out a two-year loan of$1,000 from a bank, on which you can pay eithercompound yearly interest of 1 percent or a flat rateof 2 percent for the whole two-year period. Whichoption is a better deal, and why?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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You are considering taking out a two-year loan of
$1,000 from a bank, on which you can pay either
compound yearly interest of 1 percent or a flat rate
of 2 percent for the whole two-year period. Which
option is a better deal, and why?
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