## Question

# A local finance company quotes an interest rate of 15.4 percent on one-year loans. So, if you borrow $37,000, the interest for the year will

A local finance company quotes an interest rate of 15.4 percent on one-year loans. So, if you borrow $37,000, the interest for the year will be $5,698. Because you must repay a total of $42,698 in one year, the finance company requires you to pay $42,698/12, or $3,558.17 per month over the next 12 months. 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.)** APR % 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.)** EAR %

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