A local finance company quotes an interest rate of 19.1 percent on one-year loans. So, if you borrow $44,000, the interest for the year will be $8,404.
Because you must repay a total of $52,404 in one year, the finance company requires you to pay $52,404/12, or $4,367.00 per month over the next 12 months.
a) What rate would legally have to be quoted? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b) What is the effective annual rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)