A local finance company quotes a 13 percent interest rate on one-year loans. So, if you borrow $40,000, the interest for the year will be $5,200. Because you must repay a total of $45,200 in one year, the finance company requires you to pay $45,200/12, or $3,766.67, per month over the next 12 months.

a.	What rate would legally have to be quoted?

b.	What is the effective annual rate?