It is still three weeks until payday and you have run out of cash. You have just received an advertisement from The Money Shop offering a payday loan for 21 days. You can borrow $500 for only $19.99. The fee of $19.99 is payable when you repay the loan. What is the effective annual rate of interest? Answer: 97.7%
It is still three weeks until payday and you have run out of cash. You have just received an advertisement from The Money Shop offering a payday loan for 21 days. You can borrow $500 for only $19.99. The fee of $19.99 is payable when you repay the loan. What is the effective annual rate of interest? Answer: 97.7%
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter22: Providing And Obtaining Credit
Section: Chapter Questions
Problem 2P: Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for...
Related questions
Question
It is still three weeks until payday and you have run out of cash. You have just received an advertisement from The Money Shop offering a payday loan for 21 days. You can borrow $500 for only $19.99. The fee of $19.99 is payable when you repay the loan. What is the effective annual rate of interest?
Answer: 97.7%
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning