Answer:
The correct answer is C.
Step-by-step explanation:
Giving the following information:
Loan A: 9.265% nominal rate, compounded weekly
Loan B: 9.442% nominal rate, compounded monthly
Loan C: 9.719% nominal rate, compounded quarterly
<u>To calculate the effective annual rate, we need to use the following formula:</u>
Effective annual rate= [(1+i)^n] - 1
<u>Loan A:</u>
i= 0.09265/52= 0.001782
Effective annual rate= [(1.001782^52) - 1]
Effective annual rate= 0.097 = 9.7%
<u>Loan B:</u>
i= 0.09442/12= 0.007868
Effective annual rate= [(1.007868^12) - 1]
Effective annual rate= 0.0986 = 9.86%
<u>Loan C:</u>
i= 0.09719/4= 0.02439
Effective annual rate= [(1.02439^4) - 1]
Effective annual rate= 10.11%
