A local finance company quotes a 12 percent interest rate on one-year loans. So, if you borrow \($20,000,\) the interest for the year will be \($2,400.\) Because you must repay a total of \($22,400\) in one year, the finance company requires you to pay \($22,400/12,\) or \($1,866.67,\) per month over the next 12 months. Is this a 12 percent loan? What rate would legally have to be quoted? What is the effective annual rate?