A local finance company quotes a 16.4 percent interest rate on one-year loans. So, if you borrow $32,000, the interest for the year will be $5,248. Because you must repay a total of $37,248 in one year, the finance company requires you to pay $37,248/12, or $3,104.00 per month over the next 12 months.

What rate would legally have to be quoted?

What is the effective annual rate?