What is the effective annual rate

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A local finance company quotes a 16.8 percent interest rate on one-year loans. So, if you borrow $30,000, the interest for the year will be $5,040. Because you must repay a total of $35,040 in one year, the finance company requires you to pay $35,040/12, or $2,920.00 per month over the next 12 months.

What rate would legally have to be quoted? (Do not include the percent sign (%). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

What is the effective annual rate? (Do not include the percent sign (%). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Reference no: EM13123529

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