Bank a Charges a 7

Multiple Choice

Bank A charges a 7.75% annual percentage rate and interest is due at the end of the year. Bank B charges a 7% annual percentage rate and interest must be paid monthly. What is the effective annual rate charged by each bank?

A) Bank A: 7.75%; Bank B: 7.23%
B) Bank A: 7.85%; Bank B: 7.23%
C) Bank A: 7.25%; Bank B: 7.5%
D) Bank A: 7.85%; Bank B: 8.15%