Jake has approached you for a loan and based on your assessment, his cash-flow will accommodate a repayment of $10,800 per month. He has agreed to a 5-year repayment term at an interest rate of 16% add-on. What is the maximum loan that Jake can be given? Please show formula for solution without using financial calculator or excel. I am using a texas instruements calculator.

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Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.