A payday loan is structured to obscure the true interest rate you are paying. For example, inWashington, you pay a $34 "fee" for a two-week $200 payday loan (when you repay the loan,you pay $234). What is the effective annual interest rate for this loan? (Assume 26 bi-weeklyperiods per year.)The effective annual interest rate is %. (Round to two decimal places.)Enter your answer in the answer box and then click Check Answer.Alporto In 1975, interest rates were 7.85% and the rate of inflation was 12.3% in the United States.What was the real interest rate in 1975? How would the purchasing power of your savingshave changed over the year? (Note: Be careful not to round any intermediate steps less thansix decimal places.)What was the real interest rate in 1975?Real rate of interest in 1975 was %. (Round to two decimal places.)Enter your answer in the answer box and then click Check Answer.Clear AllCheck Answernart

(1). We, have to find the two week interest rate and that there are 26 two week periods in one year.…

A payday loan is structured to obscure the true interest rate you are paying. For example, in Washington, you pay a $34 "fee" for a two-week $200 payday loan (when you repay the loan, you pay $234). What is the effective annual interest rate for this loan? (Assume 26 bi-weekly periods per year.) The effective annual interest rate is %. (Round to two decimal places.)

A payday loan is structured to obscure the true interest rate you are paying. For example, in Washington, you pay a $34 "fee" for a two-week $200 payday loan (when you repay the loan, you pay $234). What is the effective annual interest rate for this loan? (Assume 26 bi-weekly periods per year.) The effective annual interest rate is %. (Round to two decimal places.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 14P

See similar textbooks

Similar questions

Del Hawley, owner of Hawleys Hardware, is negotiating with First City Bank for a 1-year loan of 50,000. First City has offered Hawley the alternatives listed here. Calculate the effective annual interest rate for each alternative. Which alternative has the lowest effective annual interest rate? a. A 12% annual rate on a simple interest loan, with no compensating balance required and interest due at the end of the year b. A 9% annual rate on a simple interest loan, with a 20% compensating balance required and interest due at the end of the year c. An 8.75% annual rate on a discounted loan, with a 15% compensating balance d. Interest figured as 8% of the 50,000 amount, payable at the end of the year, but with the loan amount repayable in monthly installments during the year
Calculating interest and APR of installment loan. Assuming that interest is the only finance charge, how much interest would be paid on a 5,000 installment loan to be repaid in 36 monthly installments of 166.10? What is the APR on this loan?
Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for 15,000 with a nominal interest rate of 11%. However, this is an installment loan, so the bank also charges add-on interest. Mary must make monthly payments on the loan, and the loan is to be repaid in 1 year. What is the effective annual rate on the loan (assuming a 365-day year)?
If Bergen Air Systems takes out a $100,000 loan, with eight equal principal payments due over the next eight years, how much will be accounted for as a current portion of a noncurrent note payable each year?
Calculating and comparing add-on and simple interest loans. Eli Nelson is borrowing 10,000 for five years at 7 percent. Payments, which are made on a monthly basis, are determined using the add-on method. a. How much total interest will Eli pay on the loan if it is held for the full five-year term? b. What are Elis monthly payments? c. How much higher are the monthly payments under the add-on method than under the simple interest method?