First National Bank charges 12.4 percent compounded monthly on its business loans. First United Bank charges 12.7 percent compounded semiannually. As a potential borrower, which bank would you go to for a new loan

First Unit Bank is charging Lower So it is a better option for a borrower.

Explanation:

Suppose Borrowing amount = $100,000

First National Bank

Interest Charges = 12.4%

Compounded Monthly = m = 12

A = P x (1 + (r / m)) ^m

A = 100,000 (1 + (0.124 / 12)) ^12

A = 100,000 x 1.1312958

A = $113,129.58

First United Bank

Interest Charges = 12.7%

Compounded Semiannually = m = 2

A = P x (1 + (r / m)) ^m

A = 100,000 (1 + (0.127 / 2)) ^2

A = 100,000 x 1.1310323

A = $113,103.23

So, First Unit Bank is charging Lower So it is a better option for a borrower.