A local finance company quotes an interest rate of 19.7 percent on one-year loans. So, if you borrow $47,000, the interest for the year will be $9,259. Because you must repay a total of $56,259 in one year, the finance company requires you to pay $56,259/12, or $4,688.25 per month over the next 12 months.

Requirement 1:

Is the interest rate on this loan 19.7 percent?

No/Yes?

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).)

Requirement 3:

What is the effective annual rate?