Dr$.$ Ruth is going to borrow $$7,200$ to help write a book. The loan is for one year and the money can be borrowed at either the prime rate or the LIBOR rate. Assume the prime rate is $12$ percent and LIBOR $2\mathrm{.}5$ percent less. Also assume there will be a $$45$ transaction fee with LIBOR $($this amount must be added to the interest cost with LIBOR$).$

a$.$ What is the effective interest rate on the LIBOR loan?

Note: Use a $360-$day year. Do not round intermediate calculations. Input your answer as a percent rounded to $2$ decimal places.

Effective interest rate

$\%$

b$.$ Which loan has the lower effective interest cost?

LIBOR

Prime