Melanie is looking for a loan. She is willing to pay no more than an effective rate of 9.955% annually. Which, if any, of the following loans meet Melanie’s criteria? Loan A: 9.265% nominal rate, compounded weeklyLoan B: 9.442% nominal rate, compounded monthlyLoan C: 9.719% nominal rate, compounded quarterly

Convert each nominal rate to an effective annual rate using (1 + nominal rate ÷ compounding periods)^(compounding periods) − 1. Loan A’s effective rate is about 9.273%, and Loan B’s is about 9.479%, both below Melanie’s 9.955% limit. Loan C’s effective rate is about 10.079%, so it exceeds the limit. Therefore, the loans that meet her criteria are A and B (choice c).

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