Generic Company is offered a 1-year variable rate loan at a rate of prime plus 1% from Bank
A. Payments must be made monthly. Alternatively, Generic Company is offered a 1-year variable rate loan at a rate of prime plus ¾% from Bank
B. Payments must be made quarterly. Prime rate is 3.5% for both banks. What is the effective annual cost of each loan, and which loan offer should the company accept?

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The Answer of Generic Company is offered a 1-year variable rate loan at a rate of prime plus 1% from Bank
A. Payments must be made monthly. Alternatively, Generic Company is offered a 1-year variable rate loan at a rate of prime plus ¾% from Bank
B. Payments must be made quarterly. Prime rate is 3.5% for both banks. What is the effective annual cost of each loan, and which loan offer should the company accept?

Generic Company Is Offered a 1-Year Variable Rate Loan at a Rate