Equivalent with the exception of the interest rates

Assignment Help Financial Management

Reference no: EM131013188

You are considering two loans. The terms of the two loans are equivalent with the exception of the interest rates. Loan A offers a rate of 7.75 percent, compounded daily. Loan B offers a rate of 8 percent, compounded semi-annually. What loan should you select and why?

A) A; the effective annual rate is 8.06 percent.

B) A; the annual percentage rate is 7.75 percent.

C) B; the annual percentage rate is 7.68 percent.

D) B; the effective annual rate is 8.16 percent

Reference no: EM131013188

Questions Cloud

What are the fixed costs of hamburger production : In a slow year, Deutsche Burgers will produce 3.5 million hamburgers at a total cost of $4.6 million. In a good year, it can produce 4.3 million hamburgers at a total cost of $4.9 million. What are the fixed costs of hamburger production? What is the..

Time value project : You have $350.00 per month to spend on a car payment. If your credit union charged 7.5% interest on a used car, how much car can you purchase if you will only finance for 4 years? How much would you pay for this business today assuming you needed a 1..

Bank required to report to potential borrowers : First Century Bank wants to earn an effective annual return on its consumer loans of 10 percent per year. The bank uses daily compounding on its loans. by law, what interest rate is the bank required to report to potential borrowers?

Depreciation and amortization expense : Trevi Corporation recently reported an EBITDA of $31,200 and $9,500 of net income. The company has $6,600 interest expense, and the corporate tax rate is 35 percent. What was the company’s depreciation and amortization expense? Your Answer:

Equivalent with the exception of the interest rates : You are considering two loans. The terms of the two loans are equivalent with the exception of the interest rates. Loan A offers a rate of 7.75 percent, compounded daily. Loan B offers a rate of 8 percent, compounded semi-annually. What loan should y..

How much can you withdraw each month during retirement : You are planning to save for retirement over the next 15 years. To do this, you will invest $1,100 a month in a stock account and $500 a month in a bond account. The return on the stock account is expected to be 7 percent, and the bond account will p..

Bond valuation with annual payments : Bond Valuation with Annual Payments Jackson Corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 7.5%. The bonds have a yield to maturity of 6%. What is ..

Bond valuation-what is the price of the bonds : Bond Valuation with Semiannual Payments Renfro Rentals has issued bonds that have a 10% coupon rate, payable semiannually. The bonds mature in 15 years, have a face value of $1,000, and a yield to maturity of 9.5%. What is the price of the bonds?

Create a work breakdown diagram : Create a Work Breakdown diagram. Create a Network diagram. Estimate the earliest and latest start times for each activity

User Account

All Pages