Question 14

You are considering two loans. The terms of the two loans are equivalent with the exception of the interest rates. Loan A offers a rate of 9.25 percent, compounded semiannually. Loan B offers a rate of 9.1 percent, compounded daily. Which loan should you select and why?

		B; the annual percentage rate is 9.10 percent
		A; the annual percentage rate is 9.25 percent
		B; the effective annual rate is 9.53 percent
		A; the effective annual rate is 9.46 percent.
		The loans are equivalent offers so you can select either one.