Your organization has to borrow some money to build a new factory and has two choices: 1) lenderA charges 6% compounded annually, and 2) lender B charges 5.8% compounded daily. It ischeaper to do business with lender B.

Question

Quizplus · Accepted Answer

Lender B's interest rate may seem lower at first, but when compounded daily, the effective interest rate is actually higher than Lender A's 6% annual rate. Therefore, it is cheaper to do business with Lender A.

Your Organization Has to Borrow Some Money to Build a New