Cost of Bank Loan Alain's Fitness Studio recently obtained an equipment loan from a local bank. The loan is for $18,000 with a nominal interest rate of 7%. However, this is an installment loan, so the bank also charges add-on interest. Alain must make monthly payments on the loan, and the loan is to be repaid in 1 vear. What is the effective annual fate on the loan (assuming a 365 -day year)? Effective annual rate =