Difference in the effective annual rates

Reference no: EM1370996

Bank A offers to lend $10,00 at a nominal rate of 7 percent, compounded monthly. The loan (principal plus interst) must be repaid at the end of the year. Bank B also offers to lend the $10,000, but it will charge 8%, with interest due at the end of theyear. What is the difference in the effective annual rates charged by the two banks?

If there is an excel formula for this I would appreciate to know it as well.

Reference no: EM1370996

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