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EXAMPLE 4.14 Effective Interest Rate for an Add-On Interest Loan Consider again the home improvement loan problem in Example 4.12. Suppose that you borrow $5,000

EXAMPLE 4.14 Effective Interest Rate for an Add-On Interest Loan Consider again the home improvement loan problem in Example 4.12. Suppose that you borrow $5,000 with an add-on rate of 12% for two years. You will make 24 equal monthly payments. (a) Determine the amount of the monthly installment. (b) Compute the nominal and the effective annual interest rate on the loan

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