Question
Friendly's Quick Loans, Inc., offers you $3.90 for $4.90 or I knock on your door. This means you get $3.90 today and repay $4.90 when
Friendly's Quick Loans, Inc., offers you "$3.90 for $4.90 or I knock on your door." This means you get $3.90 today and repay $4.90 when you get your paycheck in one week (or else).
a. If you were brave enough to ask, what APR would Friendly's say you were paying?
b. What's the effective annual return Friendly's earns on this lending business?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Markets Theory Equilibrium Efficiency And Information
Authors: Emilio Barucci, Claudio Fontana
2nd Edition
9781447174042
