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Answer to Question #23020 in Finance for George
Question #23020
Riverside Bank offers to lend $50K at a nominal rate of 6.5%, compounded monthly. The loan must be repaid at the end of the year. Midwest Bank also offers to lend you the $50K, but it will charge an annual rate of 7.0%, with no interest due until the end of the year. How much higher or lower is the effective annual rate charged by Midwest versus the rate charged by Riverside?
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