The interest rate on a one-year loan is quoted as 10.2 percent plus three points (see the previous problem). What is the EAR? Is your answer affected by the loan amount?

Data from Previous Problem

You are looking at a one-year loan of $10,000. The interest rate is quoted as 13.4 percent plus two points. A point on a loan is 1 percent (one percentage point) of the loan amount. Quotes similar to this one are very common with home mortgages. The interest rate quotation in this example requires the borrower to pay two points to the lender up front and repay the loan later with 13.4 percent interest. What rate would you actually be paying here?