Suppose you borrow $50 from a payday lender, who charges a monthly interest rate of 5 percent,

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Suppose you borrow $50 from a payday lender, who charges a monthly interest rate of 5 percent, compounded monthly.

a. If you pay back the loan in one month, how much will you owe?

b. If you pay back the loan in one year, how much will you owe?

c. If the interest rate is raised to 6 percent rather than 5 percent, how much more will you owe if you wait for a year to pay off the debt?

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Microeconomics

ISBN: 978-1259813337

2nd edition

Authors: Dean S. Karlan, Jonathan J. Morduch

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Question Posted: Oct 03, 2018 01:33 PM

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Suppose you borrow $50 from a payday lender, who charges a monthly interest rate of 5 percent,

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Future value Present Value 1 in where i is the interest rate and n is t...View the full answer

Microeconomics

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