Problem:
Last National Bank is offering you a loan at 10%; payments on the loan are to be made monthly. Credit Union is offering you a loan where payments are to be made semi-annually; the rate on the loan is also 10%. Local Bank down the street is also offering a loan at 10% where the payments are made quarterly. Which loan has the lowest effective annual rate?
Required:
Last National Bank's loan
Local Bank's loan
Credit Union's loan
All of the loans will have the same effective annual rate.
Note: Please provide step by step solution.