Riverside Bank Offers to Lend You $50,000 at a Nominal

Multiple Choice

Riverside Bank offers to lend you $50,000 at a nominal rate of 6.5%,compounded monthly.The loan (principal plus interest) must be repaid at the end of the year.Midwest Bank also offers to lend you the $50,000,but it will charge an annual rate of 7.8%,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?

A) 1.02%
B) 1.35%
C) 1.10%
D) 1.05%
E) 1.24%