You are considering two loans as part of buying a car. The terms of the two loans are equivalent with the exception of the interest rates.

Loan A offers a rate of 7.45 percent compounded daily.

Loan B offers a rate of 7.5 percent compounded semi-annually.

Loan _____ is the better offer because______:

A.

A; you will pay less interest.

B.

A; the annual percentage rate is 7.45 percent.

C.

B; the annual percentage rate is 7.64 percent.

D.

B; the interest is compounded less frequently.

E.

B; the effective annual rate is 7.64 percent.