Melinda Paczniak borrowed $4,000 from a private source. Melinda agreed to repay the principal in four installments of $1,000 each. In addition, she paid interest each month, which was calculated by taking 1.5% (monthly rate) of the unpaid balance. Complete Melinda's loan payment schedule. Then, use Melinda's loan payment schedule to solve the effective rate problem.
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Effective Rate

The actual interest rate on an investment or loan, taking into account the compounding of interest, as opposed to the nominal rate.

Monthly Rate

The interest rate or any other rate measured over the period of one month, often expressed as a percentage per month.

Principal

The person (client) for whom a service is performed. Amount that is borrowed using credit.