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Sagot :
The loan I would select is loan A. This is because it has a lower effective annual rate.
Which loan would I select?
The loan I would select would be the cheaper one. In order to determine the cheaper loan, I would calculate the effective annual rate. The effective annual rate is the actual interest rate that is paid on a loan.
Effective annual rate = (1 + APR / m ) ^m - 1
Where: M = number of compounding
Loan A = ( 1 + 0.0775/365)^365 - 1 = 8.06%
Loan B = (1 + 0.08/2)^2 - 1 = 8.16%
To learn more about the effective annual rate, please check: https://brainly.com/question/4064975
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