You Want to Borrow R1,000 from a Friend for One

Multiple Choice

You want to borrow R1,000 from a friend for one year, and you propose to pay her R1,120 at the end of the year.She agrees to lend you the R1,000, but she wants you to pay her R10 of interest at the end of each of the first 11 months plus R1,010 at the end of the 12th month.How much higher is the effective annual rate under your friend's proposal than under your proposal?

A) 0.00%
B) 0.45%
C) 0.68%
D) 0.89%
E) 1.00%