Levine Co. wants to borrow $200,000 on an add-on basis at a simple rate of 4.00% to be paid in nine monthly installments. Levine Co. will receive the $200,000 upon approval of the loan and will pay back the principal and interest over the life of the loan.

Calculate the monthly interest payment, the monthly principal payment, the approximate annual percentage rate (APR), and the approximate effective annual rate (EAR) of this add-on loan: (Note: Do not round intermediate calculations. Round dollar values to the nearest whole dollar. Round percentages to two decimal places.)

	Value
Monthly interest payment	$667
Monthly principal payment	$22,222
Approximate annual percentage rate (APR)	4.50%
Approximate effective annual rate (EAR)	7.14%

Answer rating: 100% (QA)

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