Marie wants to borrow $26,000 for one year. She does not have a credit history or a bank account so she decides to go to a Payday lender. The Payday lender offers Marie an interest rate of 13.1 percent on the loan. Marie and the Payday lender agree that the interest on the loan will be .131 $26,000 = $3,406. So the Payday lender deducts this amount of interest from the loan up front and gives Marie the balance of $22,594. The Payday lender informs Marie that the discount is $3,406. (This question addresses what is known as discount interest.)

Compute the EAR that Marie pays on this loan?