James wants to buy a television that costs $1400

.

So far, he has saved $500

,

but he still needs $900

more. A bank will loan him $900

at 12% annual interest

using a 90-day promissory note. James also visited a loan store for a "pay day" loan to compare the cost of borrowing. The manager told James that he could borrow $900

at 12% for two weeks.

If James needed more time to repay the loan, he would be charged 16%

on the balance due for each additional week.

He wondered how much it would cost to pay the loan back in 12 weeks so he could compare the cost of the bank's lending rate. James recognized that 12 weeks is a few days less than 90 days.

1. Calculate the total cost (principal plus interest) for the 90-day promissory note from the bank.

2. how much is the payday loan at 12% for two weeks