
Chemistry
10th Edition
ISBN: 9781305957404
Author: Steven S. Zumdahl, Susan A. Zumdahl, Donald J. DeCoste
Publisher: Cengage Learning
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help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working

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Problem 6-71 Calculating EAR with Add-On Interest (LO3)
This problem illustrates a deceptive way of quoting interest rates called add-on interest. Imagine that you see an advertisement for
Crazy Judy's Stereo City that reads something like this: "$1,160 Instant Credit! 17% Simple Interest! Three Years to Pay! Low, Low
Monthly Payments!" You're not exactly sure what all this means and somebody has spilled ink over the APR on the loan contract, so
you ask the manager for clarification.
Judy explains that if you borrow $1,160 for three years at 17% interest, in three years you will owe:
$1,160 x 173
$1,160 x 1.60161
$1,857.87
Now, Judy recognizes that coming up with $1,857.87 all at once might be a strain, so she lets you make "low, low monthly payments" of
$1,857.87/36 $51.61 per month, even though this is extra bookkeeping work for her.
=
What is the APR (monthly) on this loan? (Do not round intermediate calculations. Round the final answer to 2 decimal places.)
Annual percentage rate
%
What is the EAR? (Do not round intermediate calculations. Round the final answer to 2 decimal places.)
Effective percentage rate
%
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