Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. riverside bank offers to lend you $50,000 at a nom

Riverside Bank offers to lend you $50,000 at a nominal rate of 6.5%, compounded monthly. The...

60.1K

Verified Solution

Question

Finance

Riverside Bank offers to lend you $50,000 at a nominal rate of6.5%, compounded monthly. The loan (principal plus interest) mustbe repaid at the end of the year. Midwest Bank also offers to lendyou the $50,000, but it will charge an annual rate of 7.0%, with nointerest due until the end of the year. How much higher or lower isthe effective annual rate charged by Midwest versus the ratecharged by Riverside? A. 0.35% B. 0.50% C. 0.30% D. 0.45%

Answer & Explanation Solved by verified expert
4.2 Ratings (852 Votes)
Riverside Bank Effective annual rate is calculated using the below formula EAR 1rnn1 Where r is the interest rate and n    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

Riverside Bank offers to lend you $50,000 at a nominal rate of6.5%, compounded monthly. The loan (principal plus interest) mustbe repaid at the end of the year. Midwest Bank also offers to lendyou the $50,000, but it will charge an annual rate of 7.0%, with nointerest due until the end of the year. How much higher or lower isthe effective annual rate charged by Midwest versus the ratecharged by Riverside? A. 0.35% B. 0.50% C. 0.30% D. 0.45%

Other questions asked by students

Biology
1.2K views

What is the purpose of an operating system O To organize and control hardware and...

Medical Sciences
1.2K views

limphatic capillaries allow flow of large molecules such as proteins in and out to lymph circulation...

Accounting
1.2K views

Which of the following statements is true of? partnerships? If the partners have no partnership agreement specifying how to...

Physics
1.2K views

2 A bar magnet of magnetic moment M is placed at a distance D with...

Basic Math
1.2K views

5 The slope of line FG is given What is the slope of a line...

Basic Math
1.2K views

Select the correct values of the five-number summary for the data set:15, 17, 23, 21,...

Algebra
1.2K views

Let f x 7x 18 and let g x 13x 1 Find f g 7

Algebra
1.2K views

1 2023 Kuta Software LLC All rights reserved EXTRA CREDIT SUM 1 Write each expression...

Accounting
1.2K views

(Learning Objective 1: Explain how accrual accounting differs from cash-basis accounting)Hough Consulting had the following...

Accounting
1.2K views

During your audit of Sonic Sports Sdn Bhd, a retail chain of stores, you learn...

Accounting
1.2K views

and Medicare is 1.5% of all earningh, what is inverness's net pay? If roquired, round...

Accounting
1.2K views

MacGriffin Company's Work in Process Inventory account had a $61,000 beginning balance on March 1...