You see an advertisement for Crazy Eddies Appliance City that says: $1,500 Instant Credit! 18.4% Simple Interest on loans! Three Years to Pay! Low, Low Monthly Payments! Youre 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. Eddie the manager explains that if you borrow $1,500 for three years at 18.4 percent interest, in three years you will owe: $1,500 x 1.184 3 = $1,500 x 1.65980 = $2,489.70 Now, Eddie understands that coming up with $2,489.70 all at once might be a strain, so he lets you make low, low monthly payments of $2489.70/36 = $69.16 per month, even though this is extra bookkeeping work for him. Is the interest rate on this loan 18.4 percent per year? Why or why not? What is the APR on this loan? What is the EAR (Effective Annual Rate)? (This way to calculate loan interest is called add-on interest.) Hint: the yield to maturity on a bond is the interest rate that a borrower/bond issuer is paying to a lender/bond buyer given the maturity of the loan/bond, periodic coupon payment, the price the borrower/bond issuer receives for the bond, and any final payment at maturity. The excel function RATE calculates yield to maturity given the above information