A farmer is planning to borrow $6,900 for a year. Bank A has an interest rate of 10.22% compounded quarterly. While Bank B has an interest rate of 8.13% compounded annually.
(i) Calculate the amount of interest paid to Bank A.
a. $732.87 b. $807.78
c. $807.89 d. $657.95
e. None of the answers are correct
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(ii) Calculate the amount of interest paid to Bank B.
a. $606.68 b. $606.60
c. $560.99 d. $515.38
e. None of the answers are correct
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(iii) Calculate the effective interest rate at Bank A.
a. 11.71% b. 10.62%
c. 9.54% d. 21.93%
e. None of the answers are correct
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(iv) Calculate the effective interest rate at Bank B.
a. 8.13% b. 7.47%
c. 8.79% d. 17.70%
e. None of the answers are correct
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(v) Which loan has the least cost?
a. A b. B
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