In your search for the best rate on a new-car loan, you note that various lenders quote rates with differing compounding frequencies. Your car dealer offers financing at 7.5% compounded monthly. For you to be indifferent as to which lending rate to choose, what would the nominal rate be on a loan from another lender with interest compounded
a. Annually?
b. Semiannually?
c. Quarterly?

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The Answer of In your search for the best rate on a new-car loan, you note that various lenders quote rates with differing compounding frequencies. Your car dealer offers financing at 7.5% compounded monthly. For you to be indifferent as to which lending rate to choose, what would the nominal rate be on a loan from another lender with interest compounded
a. Annually?
b. Semiannually?
c. Quarterly?

In Your Search for the Best Rate on a New-Car