In a discount interest loan, you pay the interest payment up front. For example, if a 1-year loan is stated as $32,000 and the interest rate is 9.75%, the borrower pays .0975 $32,000 = $3,120 immediately, thereby receiving net funds of $28,880 and repaying $32,000 in a year.

a.	What is the effective interest rate on this loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Effective interest rate

%

b.	What is the effective annual rate on a 1-year loan with an interest rate quoted on a discount basis of 19.75%? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Effective annual rate

%