A local finance company quotes an interest rate of 18 percent on one-year loans. So, if you borrow $20,000, the interest for the year will be $3,600. Because you must repay a total of $23,600 in one year, the finance company requires you to pay $23,600/12, or $1,966.67 per month over the next 12 months. Is the interest rate on this loan 18 percent? What rate would legally have to be quoted? What is the effective annual rate?