Question
You need a quick $400 to pay this months cell phone bill. An Indianapolis payday loan company will lend you that amount for one month,
You need a quick $400 to pay this months cell phone bill. An Indianapolis payday loan company will lend you that amount for one month, charging you a fee of only $50 (meaning you pay back $450 in one month). The fee will be due on the day you pay off the loan. Recognizing that the fee is in reality the interest payment: a) what is the true Effective Annual Rate (EAR) on this loan? b) what is the Annual Percentage Rate (APR) on this loan?
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Business Analysis And Valuation Using Financial Statements Text And Cases
Authors: Krishna G. Palepu, Paul M. Healy, Victor L Bernard
3rd Edition
0324118945, 9780324118940
