QUESTION 3

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 8.10 percent compounded daily. Loan B offers a rate of 8.25 percent compounded semi-annually. Loan _____ is the better offer because______.

	A.	A; the effective annual rate is 8.41 percent
	B.	A; the annual percentage rate is 8.41 percent
	C.	B; the annual percentage rate is 8.32 percent
	D.	B; the interest is compounded less frequently
	E.	B; the effective annual rate is 8.42 percent