roblem $6-71$ Calculating EAR with Add$-$On Interest $($LO$3)$

This problem illustrates a deceptive way of quoting interest rates called add$-$on interest. Imagine that you see an advertisement for Crazy Judy$$s Stereo City that reads something like this: $$$$1,380$ Instant Credit! $17\%$ Simple Interest! Three Years to Pay! Low, Low Monthly Payments!$$ 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.

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Judy explains that if you borrow $$1,380$ for three years at $20\%$ interest, in three years you will owe:

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$$1,380203=$ $$1,3801\mathrm{.}72800=$ $$2,384\mathrm{.}64$

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Now, Judy recognizes that coming up with $$2,384\mathrm{.}64$ all at once might be a strain, so she lets you make $$low$,$ low monthly payments$$ of $$2,384\mathrm{.}64/36=$ $$66\mathrm{.}24$ per month, even though this is extra bookkeeping work for her.

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What is the APR $($monthly$)$ on this loan? $($Do not round intermediate calculations. Round the final answer to $2$ decimal places.$)$

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Annual percentage rate$\%$

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What is the EAR? $($Do not round intermediate calculations. Round the final answer to $2$ decimal places.$)$

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Effective percentage rate$\%$