East Coast Bank Offers to Lend You $25,000 at a Nominal

Multiple Choice

East Coast Bank offers to lend you $25,000 at a nominal rate of 7.5%,compounded monthly.The loan (principal plus interest) must be repaid at the end of the year.Midwest Bank also offers to lend you the $25,000,but it will charge an annual rate of 8.3%,with no interest due until the end of the year.What is the difference in the effective annual rates charged by the two banks?

A) 0.93%
B) 0.77%
C) 0.64%
D) 0.54%