Calculate the amount of interest paid to bank

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Reference no: EM131898788

A farmer is planning to borrow $6,900 for a year. Bank A has an interest rate of 10.22% compounded quarterly. While Bank B has an interest rate of 8.13% compounded annually.

(i) Calculate the amount of interest paid to Bank A.

a. $732.87 b. $807.78

c. $807.89 d. $657.95

e. None of the answers are correct

Enter your response here

(ii) Calculate the amount of interest paid to Bank B.

a. $606.68 b. $606.60

c. $560.99 d. $515.38

e. None of the answers are correct

Enter your response here

(iii) Calculate the effective interest rate at Bank A.

a. 11.71% b. 10.62%

c. 9.54% d. 21.93%

e. None of the answers are correct

Enter your response here

(iv) Calculate the effective interest rate at Bank B.

a. 8.13% b. 7.47%

c. 8.79% d. 17.70%

e. None of the answers are correct

Enter your response here

(v) Which loan has the least cost?

a. A b. B

Enter your response here

Reference no: EM131898788

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