You are considering two loans. The terms of the two loans are equivalent with the exception of the interest rates. Loan A offers a rate of 8.5% compounded monthly. Loan B offers a rate of 8.9% compounded semi-annually. Loan _____ is the better offer because ______.
A) A; the APR is lower.
B) A; the EAR is lower.
C) B; the APR is lower.
D) B; the EAR is lower.
E) It does not matter as both loans have equal costs.
Correct Answer:
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