(A)
Loan amount (P)=Â Â 35000 Â Â
Years =Â Â 5Â Â
Total months (n)= 5*12=Â Â 60
Interest rate (r)= 7% or   0.07 Â
Monthly Interest rate (i)= 0.07/12=Â Â
0.005833333333Â Â
    Â
Equal monthly payments formula = P* i
*((1+i)^n)/(((1+i)^n)-1)Â Â Â Â Â
=35000*0.00583333333*((1+0.0058333333)^60)/(((1+0.0058333333)^60)-1)Â Â
  Â
=693.0419489Â Â Â Â Â
So, equal monthly payment Amount is Â
$693.04Â Â
    Â
(B)
Interest rate (r)= 7% or   0.07 Â
no of compounding in a year (m)=Â Â 12Â Â
Effective Annual rate formula = (((1+ (r/m))^m)-1Â Â
  Â
=((1+(0.07/12))^12)-1Â Â Â Â Â
=0.07229008086Â Â or 7.23%Â Â
So, EAR of loan is 7.23%Â Â Â Â Â
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