You wish to take out a loan for one year in order to pay for your last

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Question:

You wish to take out a loan for one year in order to pay for your last year of college. You figure you will need $

20, 000 .

You are given two different options: a loan with a

9.4 %

interest rate, with interest compounded only once a year at the end of the year, or a

9.1 %

APR loan, with the interest compounded monthly.

Which loan would you prefer: the

9.4 %

interest rate loan compounded once a year, or the

9.1 %

APR loan with interest compounded monthly?

Related Book For answer-question

Foundations of Financial Management

ISBN: 978-1259024979

10th Canadian edition

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta

See More Books

Posted Date: Mar 16, 2024 01:46 AM

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You wish to take out a loan for one year in order to pay for your last

Question:

Expert Answer:

The better loan option for you depends on the effect of compounding In this case although the 94 loa... View the full answer

Foundations of Financial Management

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