Question: A local finance company quotes a 17 percent interest rate
A local finance company quotes a 17 percent interest rate on one-year loans. So, if you borrow $25,000, the interest for the year will be $4,250. Because you must repay a total of $29,250 in one year, the finance company requires you to pay $29,250y12, or $2,437.50, per month over the next 12 months. Is this a 17 percent loan? What rate would legally have to be quoted? What is the effective annual rate?
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