Banes Co. wants to borrow $300,000 on an add-on basis at a simple rate of 12.00% to be paid in nine monthly installments. Banes Co. will receive the $300,000 upon approval of the loan and will pay back the principal and interest over the life of the loan. Calculate the monthly interest payment, the monthly principal payment, the approximate annual percentage rate (APR), and the approximate effective annual rate (EAR) of this add-on loan: (Note: Do not round intermediate calculations. Round dollar values to the nearest whole dollar. Round percentages to two decimal places.) Monthly interest payment Monthly principal payment Approximate annual percentage rate (APR) Approximate effective annual rate (EAR) Value

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Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.