A local finance company quotes an interest rate of 16% on one-year loans. So, if you borrow $30,000, the interest for the year will be $4,800. Because you must repay a total of $34,800 in one year, the finance company requires you to pay $34,800/12 or $2900.00 per month over the next 12 months.

1.What interest rate would legally have to be quoted?

What is the effective annual rate?