53.2
2. You need to take out a loan. One bank offers 8%
compounded monthly and another offers 8.1% compounded
semi-annually. Which one should you choose and why? [5 pts]
You have two APR's with different compounding periods. These are not directly comparable unless you convert them both into effective rates:
You should take the 8.1% semi-annually compounded because the total interest you pay over the year (8.26%) is less than the interest you pay at 8% compounded monthly (8.3%).