### 6.1 Introduction to Lending

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• Math Help

Recall from page 256 that interest calculated only on the principal is simple interest. Also, the rate at which this interest is calculated is the annual percentage rate (APR), or nominal APR. The term effective APR is an APR that, depending on the particular legal definition, can include fees or other charges, and compound interest (see Section 6.2). Note that the APR in Example 6(b) is an effective APR because the calculation includes a service charge.

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• Checkpoint Solution

The annual percentage rate for this loan is

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