Merchants Bank Offers to Lend You $30,000 at a Nominal

Multiple Choice

Merchants Bank offers to lend you $30,000 at a nominal rate of 6.0%, simple interest, with interest paid quarterly. Gold Coast Bank offers to lend you the $30,000, but it will charge 7.0%, simple interest, with interest paid at the end of the year. What's the DIFFERENCE in the effective annual rates charged by the two banks?

A) 1.49%
B) 1.24%
C) 1.04%
D) 0.86%