Payday loans, cont. Imagine that you borrow $61 from a pay day loan establishment. After one week, it wants the principal plus 10 percent interest back. But you will not have that kind of money; so, instead, you go to another establishment and borrow the money you owe the first one. You do this for one year. Interest rates do not change from one establishment to another, or from one week to another.

(a) How much money will you owe at the end of the year?

(b) What is the total amount of interest that you will owe at the end of the year, in dollar terms?

(c) What is the total amount of interest that you will owe at the end of the year, expressed as a fraction of the principal?

(d) What does this tell you about the wisdom of taking out payday loans?