Because of a job change, Bob has just relocated to the southeastern United States. He sold his furniture before he moved, so he’s now shopping for new furnishings. At a local furniture store, he’s found an assortment of couches, chairs, tables, and beds that he thinks would look great in his new two-bedroom apartment; the total cost for everything is $6,400. Because of moving costs, Bob is a bit short of cash right now, so he’s decided to take out an installment loan for $6,400 to pay for the furniture. The furniture store offers to lend him the money for 48 months at an add-on annual interest rate of 6.5 percent. The credit union at Bob's firm also offers to lend him the money—they’ll give him the loan at an interest rate of 6 percent simple, but only for a term of 24 months. Both Plans require monthly payments with zero balance at the end of the loan.

a. Determine the APR for both loans.

b. How would the APR of the Credit Union loan change, if it was an interest only loan with a lump sum payment at the end of two years and not an installment loan?