According to a Jan. 19, 2015 article in the New York Times, a typical payday loan for $500 is paid back after 22 weeks and costs the borrower $1,500 in principal and interest. Lett be time in weeks and suppose that the borrower makes 22 equal weekly payments, i.e., $1,500/22 $68.18. What is the weekly interest rate, assuming continuous compounding? (Set up the usual model and solve it. You may need to use the solve function on your calculator to get a numerical value for r.)

According to a Jan. 19, 2015 article in the New York Times, a typical payday loan for $500 is paid back after 22 weeks and costs the borrower $1,500 in principal and interest. Lett be time in weeks and suppose that the borrower makes 22 equal weekly payments, i.e., $1,500/22 $68.18. What is the weekly interest rate, assuming continuous compounding? (Set up the usual model and solve it. You may need to use the solve function on your calculator to get a numerical value for r.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 14P

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