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Bank A offers to lend you $14,000 at a nominal rate of 8%, compounded monthly. The loan (principal plus interest) must be repaid at the
Bank A offers to lend you $14,000 at a nominal rate of 8%, compounded monthly. The loan (principal plus interest) must be repaid at the end of the year. Bank B also offers to lend you the $14,000, but it will charge 9%, with interest due at the end of the year. What is the difference in the effective annual rates charged by the two banks?
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