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Question
You go to three different banks to borrow $10,000 for one year. Each says it will lend you the money at 10 percent, but their terms differ as follows:
Bank A: Simple interest
Bank B: Add-on interest
Bank C: Discounted interest
Banks A and C require a single payment at the end of the year. Bank B requires 12 equal monthly payments beginning at the end of the first month. What is the difference between the highest and lowest effective annual rate in this case?
a. 13.0%
b. 9.5%
c. 9.0%
d. 8.5%
e. 8.0%
Answer
This answer is hidden. It contains 621 characters.
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