Friendly's Quick Loans, Inc., offers you "$4.30 for $5.30 or I knock on your door." This means you get $4.30 today and repay $5.30 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? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What's the effective annual return Friendly's earns on this lending business? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. APR % b. EAR %

Friendly's Quick Loans, Inc., offers you "$4.30 for $5.30 or I knock on your door." This means you get $4.30 today and repay $5.30 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? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What's the effective annual return Friendly's earns on this lending business? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. APR % b. EAR %

PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)

6th Edition

ISBN:9781337117005

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter7: Using Consumer Loans

Section: Chapter Questions

Problem 2FPE

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