Suppose Community Bank offers to lend you $10,000 for one year at a nominal annual rate of 6.50%, but you must make interest payments at the end of each quarter and then pay off the $10,000 principal amount at the end of the year. What is the effective annual rate on the loan?
A. 7.99%
B. 5.39%
C. 6.73%
D. 6.66%
E. 8.26%
Answer: D
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