Suppose you can borrow money at 12.2% per year (APR) compounded semiannually or 9.48% per year (APR) compounded monthly.

a. Calculate the effective annual rates.

(Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

Effective Annual Rates

12.20 _________ ?%

9.48 _________?%

b. Which is the better deal?

1) 9.48% per year (APR) compounded monthly.

2) 12.20% per year (APR) compounded semiannually