Effective Interest rates
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East Coast Bank offers to lend you $25,000 at a nominal rate of 7.5%, compounded monthly. The loan (principal plus interest) must be repaid at the end of the year. Midwest Bank also offers to lend you the $25,000, but it will charge an annual rate of 8.3%, with no interest due until the end of the year. What is the difference in the effective annual rates charged by the two banks?
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Effective Interest rates charged by two banks have been calculated.
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East Coast Bank offers to lend you $25,000 at a nominal rate of 7.5%, compounded monthly. The loan (principal plus interest) must be repaid at the end of the year. Midwest Bank also offers to lend you the $25,000, but it will charge an annual rate of 8.3%, with no interest due until the end of the year. What is the difference in the effective annual rates charged ...
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