A local finance company quotes an interest rate of 15.9 percent on one-year loans. So, if you borrow $27,000, the interest for the year will be $4,293. Because you must repay a total of $31,293 in one year, the finance company requires you to pay $31,293/12, or $2,607.75, per month over the next 12 months. Is the interest rate on the loan 15.9 percent? What rate would legally have to be quoted? What is the effective annual rate?