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kati45 [8]
4 years ago
14

Dave is considering two loans. Loan U has a nominal interest rate of 9.97%, and Loan V has a nominal interest rate of 10.16%. If

Loan U is compounded daily and Loan V is compounded quarterly, which loan will have the lower effective interest rate, and how much lower will it be?
Mathematics
2 answers:
Ierofanga [76]4 years ago
8 0
Loan u
R=(1+0.0997/360)^360)-1
R=0.105*100=10.5%
Loan v
R=(1+0.1016/4)^4)-1
R==0.106*100=10.6%
Loan u is the lower by 0.1%
11Alexandr11 [23.1K]4 years ago
5 0
<span>It's - d. <span>Loan U’s effective rate will be 0.0713 percentage points lower than Loan V’s.
</span></span>
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  see attachments

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