Interest rates in the form of add-on interest

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Reference no: EM131047276

Banks sometimes quote interest rates in the form of “add-on interest.” In this case, if a 1-year loan is quoted with a 19.0% interest rate and you borrow $1,000, then you pay back $1,080. But you make these payments in monthly installments of $90 each.

What is the true APR on this loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Use a financial calculator or Excel.)

What is the effective annual rate on the loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Reference no: EM131047276

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