Calculating EAR [ LO] 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. Is the interest rate on this loan 18.4 percent? What rate would legally have to be quoted? What is the effective annual rate