Bank A is offering a loan of $4,000 at 8% interest rate compounded monthly while Bank...

Bank A is offering a loan of $4,000 at 8% interest rate compounded monthly while Bank B is offering $4,000 loan at 7.98% interest rate compounded daily. Which bank should you take the loan from?

Choose the correct answer:

Bank B as it has a lower effective rate of 8.51%

Bank B as it has a lower effective rte of 8.306099%

Both banks have same effective rate so it does not matter which bank you borrow from

Bank A since it has a lower effective rate of 8.299951%

Bank A as the effective rate is lower at 8.51%

Expert Solution

Calculations-Please upvote if the answer is helpful.In case of doubt,do comment.Thanks.

jeff jeffy answered 2 years ago

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