Van Buren Resources Inc. is considering borrowing $80,000 for 197 days from its bank. Van Buren will pay $5,000 of interest at maturity, and it will repay the $80,000 of principal at maturity. Assume that there are 365 days per year.

1. Calculate the loans annual financing cost. Round your answer to two decimal places.

   %

2. Calculate the loans annual percentage rate. Round your answer to two decimal places.

   %

3. What is the reason for the difference in your answers to Parts a and b?

   The -Select-AFCAPRItem 3 does not consider compounding effects.