Question
Yolanda has an urgent expense she needs to pay for now, but has no cash savings at the moment. Her uncle has offered to lend
Yolanda has an urgent expense she needs to pay for now, but has no cash savings at the moment. Her uncle has offered to lend her the $1300 she needs now if she agrees to repay him $1490 in 2 years. Alternatively, Yolanda has a good credit rating and could borrow the money from her bank at a rate of 6.5% per annum, compounded quarterly. What should Yolanda do and Why?
Select one: a. Borrow from the bank as this is a better option: the effective annual rate the bank is offering her is 6.5%. b. Borrow from the bank as this is a better option: the effective annual rate the bank is offering her is 6.66%. c. Borrow from her uncle as this is a better option: the effective annual rate the uncle is offering her is 6.88%. d. Borrow from her uncle as this is a better option: the effective annual rate the uncle is offering her is 7.06%.
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