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What is the difference in the effective annual rates charged

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Problem - Riverside Bank offers to lend you $50,000 at a nominal rate of 7%, compounded monthly. The loan (principal plus interest) must be repaid at the end of the year. Midwest Bank also offers to lend you the $50,000, but it will charge an annual rate of 7.0%, with no interest due until the end of the year. What is the difference in the effective annual rates charged by the two banks?

Reference no: EM133005728

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