Which would be the best loan offer? Loan A has a 9.5 percent rate calculated quarterly and Loan B has a 9.25 percent rate calculated monthly.

Question

Answer

Loan B is a lower interest rate, so it is the better choice.

Answer

The effective rate on Loan A is 9.84 percent and on Loan B is 9.92. percent. Therefore, Loan A is best.

Answer

Loan A is compounded less frequently, so it would be the best option.

Answer

The effective rate on Loan A is 9.84 percent and on Loan B is 9.65 percent. Therefore, Loan B is best.

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