Bank A offers to lend $10,00 at a nominal rate of 7 percent, compounded monthly. The loan (principal plus interst) must be repaid at the end of the year. Bank B also offers to lend the $10,000, but it will charge 8%, with interest due at the end of theyear. What is the difference in the effective annual rates charged by the two banks?
If there is an excel formula for this I would appreciate to know it as well.