Question
A local finance company quotes an interest rate of 16.6 percent on one-year loans. So, if you borrow $31,000, the interest for the year will
A local finance company quotes an interest rate of 16.6 percent on one-year loans. So, if you borrow $31,000, the interest for the year will be $5,146. Because you must repay a total of $36,146 in one year, the finance company requires you to pay $36,146/12, or $3,012.17 per month over the next 12 months. Requirement 1: Is the interest rate on this loan 16.6 percent? Requirement 2: What rate would legally have to be quoted? (Round your answer as directed, but do not use rounded numbers in intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) APR % Requirement 3: What is the effective annual rate? (Round your answer as directed, but do not use rounded numbers in intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) Effective annual rate %
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