3. This problem illustrates a deceptive way of quoting interest rates called add-on interest. Imagine that you see an ad for Joe's GameStore: "$2,000 Instant Credit! Only 6% Simple Interest! 5 Years to Pay with Low Monthly Payments of only $44.61"

You ask Joe to explain how it works and he says that if you borrow $2,000 for 5 years at 6% interest, in 5 years you will owe: $2,000 x 1.065 = $2,676.45

Instead of paying $2,676.45 in one big payment, Joe lets you make "low, low monthly payments" of $2,676.45/ 60 = $44.61 per month.

What is the actual EAR of this loan?

Group of answer choices

12.81%

6%

9.46%

12.12%