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Suppose you want to start a new business and need to apply for business loans. There are two major banks in town, and they provide you with the following offers: The first bank charges 12 percent compounded monthly on the loans. The second bank charges 12.2 percent compounded semiannually. As a potential borrower, to which bank would you go for a business loan

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francocanacari

According to the calculations made, I would go to the Second Bank.

Supposing you want to start a new business and need to apply for business loans, and there are two major banks in town, and they provide you with the following offers: The first bank charges 12 percent compounded monthly on the loans, and the second bank charges 12.2 percent compounded semiannually, to determine, as a potential borrower, to which bank would you go for a business loan, the following calculation must be performed:

  • 100 x (1 + 0.12 / 12) ^ 1x12
  • 100 x (1.01) ^ 12
  • 100 x 1.1268
  • 112.68

  • 100 x (1 + 0.122 / 2) ^ 1x2
  • 100 x 1,061 ^ 2
  • 100 x 1.1257
  • 112.57

Therefore, I would go to the Second Bank.

Learn more in https://brainly.com/question/22621039

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