Question

Andrew is choosing between four loans. Loan P has a nominal rate of 10.393%, compounded daily. Loan Q has a nominal rate of 10.516%, compounded weekly. Loan R has a nominal rate of 10.676%, compounded monthly. Loan S has a nominal rate of 10.755%, compounded annually. Which loan will give Andrew the best effective interest rate? a. loan P b. loan Q c. loan R d. loan SAndrew is choosing between four loans. Loan P has a nominal rate of 10.393%, compounded daily. Loan Q has a nominal rate of 10.516%, compounded weekly. Loan R has a nominal rate of 10.676%, compounded monthly. Loan S has a nominal rate of 10.755%, compounded annually. Which loan will give Andrew the best effective interest rate? a. loan P b. loan Q c. loan R d. loan S

Answer 1

The loan with the highest effective interest rate will give Andrew the best return.

Step-by-step explanation:

To determine which loan will give Andrew the best effective interest rate, we need to calculate the effective interest rate for each loan.

The formula for calculating the effective interest rate is:

Effective Interest Rate = (1 + Nominal Rate / Number of Compounding Periods)^(Number of Compounding Periods) - 1

Let's calculate the effective interest rate for each loan:

Loan P: Effective Interest Rate = (1 + 0.10393/365)^(365) - 1

Loan Q: Effective Interest Rate = (1 + 0.10516/52)^(52) - 1

Loan R: Effective Interest Rate = (1 + 0.10676/12)^(12) - 1

Loan S: Effective Interest Rate = (1 + 0.10755/1)^(1) - 1

The loan with the highest effective interest rate will give Andrew the best return. Therefore, the answer is d. loan S.

Answer 2

D as in Drink

Loan S as a Snake

Step-by-step explanation: