Effective Annualized Cost of a Banker's Acceptance

CFA Level I Corporate Finance
#1

The effective annualized cost (%) of a banker’s acceptance that has an all-inclusive annual rate of 5.25% for a one-month loan of $2,000,000 is closest to:

5.54%. 5.38%. 5.27%.

answer: http://i.imgur.com/bjwEWA7.png

I am curious though why on the denominator you take the Loan Amount and multiply by the (1 - effective rate)

Would someone care to walk me through a brief explanation?

#2

Because there are the proceeds. As the banker’s acceptance is delivered at a discount you effectively will only receive the amount after interests.

#3

since we are calculating the effictive annual cost, why we did take it to the power 12 instead of multiplying by 12?