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Problem:

Riverside Bank offers to lend you $50,000 at a nominal rate of 6.5%, compounded monthly. The loan (principal plus interest) must be repaid at the end of the year. Midwest Bank also offers to lend you the $50,000, but it will charge an annual rate of 6.3%, with no interest due until the end of the year.

Required:

Question: How much higher or lower is the effective annual rate charged by Midwest versus the rate charged by Riverside?

-.30%

-.40%

-.38%

-.43%

-.49%

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91148145

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