Question
PPP Company Limited provides payday loan for an administration fee of $8 per loan, plus 5% of the principal borrowed, plus 50% effective annual rate
PPP Company Limited provides payday loan for an administration fee of $8 per loan, plus 5% of the principal borrowed, plus 50% effective annual rate of interest. RRR Company offers payday loan for a flat fee of $10 per contract, plus 59% effective annual rate of interest. Anne Chang wants to borrow $500 for 15 days. Required for each company:
(a) what is the cost in dollars of the loan? (8 marks)
(b) what is the actual EAR of the loan (2 marks)?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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 Management For Public, Health, And Not-for-Profit Organizations
Authors: Steven A. FinklerDaniel L. Smith, Thad D. Calabrese
6th Edition
978-1506396811, 150639681X
