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Interest paid at the end of one year

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Larry is considering two bank loans. Bank A is offering a loan at 5.21% interest paid at the end of one year, annual compounding. Bank B is offering a 5.15% interest loan, compounded quarterly, paid at the end of one year. Which bank loan should Larry select?

  • Bank A as the nominal rate of 5.21%is better than the nominal rate 0f 5.15 %for Bank B.
  • Bank B as the effective rate of 5.15% is better than the effective rate of 5.21% for Bank A
  • Bank B as the effective rate of 5.25% is better than the effective rate of 5.21% for Bank A
  • Bank A as the effective rate of 5.21% is better than the effective rate of 5.25% for Bank B

Reference no: EM131757914

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