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After examining the various personal loan rates available to you, you find that you can borrow funds from a finance company at an APR of
After examining the various personal loan rates available to you, you find that you can borrow funds from a finance company at an APR of
percent compounded
weeklyweekly
or from a bank at an APR of
percent compounded
quarterlyquarterly.
Which alternative is more attractive?
Question content area bottom
Part
a If you borrow
$
from a finance company at an APR of
percent compounded
weeklyweekly
for
year how much do you need to payoff the loan?
$enter your response here
Round to the nearest cent.
What is the effective annual rateEAR
enter your response here
Round to two decimal places.
b If you borrow
$
from a bank at an APR of
percent compounded
quarterlyquarterly
for
year how much do you need to payoff the loan?
$enter your response here
Round to the nearest cent.
What is the effective annual rateEAR
enter your response here
Round to two decimal places.
c Based on the findings in parts a and
b
which alternative is more attractive?Select the best choice below.
A
The loan from the bank at an APR of compounded quarterlyTheloanfromthebankatanAPRofcompoundedquarterly
B
The loan from the finance company at an APR of compounded weeklyTheloanfromthefinancecompanyatanAPRofcompoundedweekly
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