A local finance company quotes a 16 percent interest rate on one-year loans. So, if you borrow $18,000, the interest for the year will be $2,880. Because you must repay a total of $20,880 in one year, the finance company requires you to pay $20,880/12, or $1,740.00, per month over the next 12 months. Is this a 16 percent loan?

What rate would legally have to be quoted? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Annual percentage rate

%

What is the effective annual rate? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Effective annual rate

%