Draw a cash flow diagram and find out the Effective Rate (True Rate) of the loan case.

Real Interest Rate? In Asia, poor credit people can go to "special" loan contact to have their needed money borrowed. Here is a case: Mr. Chen is in bad need for a small loan of $20,000. Due to bad credit, he approached a special loan agent and received a $20,000 1-year contractfrem-a "Company" at-menthly interest rate 2% and topay back after a year. The agent told him due to $20,0002%12=$4,800 of interest, he will only get $15,200. The "Company" needs to collect the interestnirst. Thinat's theirbusiness rule. If not pay back atter one year, the interest rate will add 3% more per month, per annual contract. After learning IME 314 , what is the real interest rate Mr. Chen is taken