A house is for sale for $225,000. You have a choice of two 30-year mortgage loans with monthly payments: (1) if you make a down payment of $25,000, you can obtain a loan with a 5% rate of interest or (2) if you make a down payment of $45,000, you can obtain a loan with a 4% rate of interest. What is the effective annual rate of interest on the additional $20,000 borrowed on the first loan? [Incremental Borrowing Cost Chapter 6]