Kathy payment will be the same under either option

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Reference no: EM131881344

Kathy can take out a loan of 50,000 with Bank A or Bank B. With Bank A, she must repay the loan with 60 monthly payments using the amortization method with interest at 7% compounded monthly. With Bank B, she can repay the loan with 60 monthly payments using the sinking fund method. The sinking fund will earn 6.5% cornpounded monthly, what nominal interest rate compounded monthly can Bank B charge on the loan, so that Kathy's payment will be the same under either option?

Reference no: EM131881344

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