What is 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.) 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.)
What is 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.) 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.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
I dont understand how I keep getting the wrong EAR, is there something wrong with my Excel? I am inputting everything right
Transcribed Image Text:Friendly's Quick Loans, Inc., offers you $4.25 today but you must repay $5.75 when you
get your paycheck in one week (or else).
a. What is 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.)
b. 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.)
X Answer is complete but not entirely correct.
Effective annual return
6,706,616.86 × %
а.
b.
Annual percentage rate
1,835.30
%
Transcribed Image Text:EAR & APR
# weeks
1
PV loan. $
4.2500
FV loan. $
5.7500
52.0000 I# periods in year weeks
weekly rate %
0.3529 |
EAR
=(1+B157)^B156-1
APR
1,835.2941
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