Your friend is short on cash and thinking about using one of those payday loan places. You told him it's a bad idea and you are explaining why.

The loan is for $$850$ and it will be paid back $11$ days later. He will have to pay them back $$1400.$ Assume the company compounds every $11$ days.

$2$a$.$ What is the effective interest rate per year?

$2$b$.$ What would you owe if you kept the money for $1$ year?