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?
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Practical Financial Management
Authors: William R. Lasher
8th edition
1305637542, 978-1305887237, 1305887239, 978-1305637542
