7. Suppose you fall on hard times and need to get a payday loan. The terms of the loan are that you write a check to PAYDAY inc. for $120 that is postdated 10 days from now and theyll give you $100 today. What is the Effective Yield (in percent)?

Calculate the interest rate for the loan. (r) Figure out how many times you can do this loan in a year. (t)

EY= ((1+r)^t) - 1

9. Suppose an annuity due makes 5 payments of $3,500 and has a discount rate of 8.5%. What is the present value of this annuity due?