1. Kenneth's Arrows and Bows borrow $14,000 for one year at 7 percent interest. What is the effective rate of interest if the loan is discounted? (Use 360 days in a year.)
2. Holland Construction Co. has an outstanding 180-day bank loan of $409,000 at an annual interest rate of 9.2%. The company is required to maintain a 18% compensating balance in its checking account. What is the effective interest rate on the loan? Assume the company would not normally maintain this average amount. (Use 360 days in a year. Round your answer to 2 decimal places.)