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A local finance company quotes an interest rate of 18.4 percent on one-year loans. So, if you borrow $20,000, the interest for the year will

A local finance company quotes an interest rate of 18.4 percent on one-year loans. So, if you borrow $20,000, the interest for the year will be $3,680. Because you must repay a total of $23,680 in one year, the finance company requires you to pay $23,680/12, or $1,973.33 per month over the next 12 months.

a. APR %
b. EAR %

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