First National Bank charges 10.4 percent compounded monthly on its business loans. First United Bank charges 10.6 percent compounded semiannually. Calculate the EAR for each bank. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) First National Bank First United Bank % As a potential borrower, which bank would you go to for a new loan?
First National Bank charges 10.4 percent compounded monthly on its business loans. First United Bank charges 10.6 percent compounded semiannually. Calculate the EAR for each bank. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) First National Bank First United Bank % As a potential borrower, which bank would you go to for a new loan?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:First National Bank charges 10.4 percent compounded monthly on its business loans.
First United Bank charges 10.6 percent compounded semiannually.
Calculate the EAR for each bank. (Do not round intermediate calculations and enter
your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
First National Bank
%
First United Bank
%
As a potential borrower, which bank would you go to for a new loan?
Expert Solution
Given:
Here,
FN Bank Interest Rate is 10.4%
Compounding Period is Monthly i.e. 12
FU Bank Interest Rate is 10.6%
Compounding Period is Semi-Annually i.e. 2
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