These are Time value of Money questions: QUESTION 1 Marina had an accident with her car and the repair bill came to $900. She didn't have any emergency fund money and no extra money in her monthly budget, so she ended up borrowing from a pay-day loan company. As long as she can pay the loan back at the end of the 30 day period she won't be charged any interest, technically. However, she did have to pay an $17 processing fee per $100 that she borrowed. If she were to consider the processing fee to represent interest paid in her formula, what would she discover to be the annual interest rate she was charged on her short term loan? QUESTION 2 The end of the month has arrived and Marina was only able to save up a portion of the money she owed so far. This means she will have to delay paying off on the remaining amount. Besides the delayed payment fee that she is charged, she will now have to pay interest on the remaining amount until it is paid off. The APR (annual percentage rate) is 47%, but the interest is compounded daily. What is the effective interest rate that Marina will actually be paying
These are Time value of Money questions: QUESTION 1 Marina had an accident with her car and the repair bill came to $900. She didn't have any emergency fund money and no extra money in her monthly budget, so she ended up borrowing from a pay-day loan company. As long as she can pay the loan back at the end of the 30 day period she won't be charged any interest, technically. However, she did have to pay an $17 processing fee per $100 that she borrowed. If she were to consider the processing fee to represent interest paid in her formula, what would she discover to be the annual interest rate she was charged on her short term loan? QUESTION 2 The end of the month has arrived and Marina was only able to save up a portion of the money she owed so far. This means she will have to delay paying off on the remaining amount. Besides the delayed payment fee that she is charged, she will now have to pay interest on the remaining amount until it is paid off. The APR (annual percentage rate) is 47%, but the interest is compounded daily. What is the effective interest rate that Marina will actually be paying
Chapter7: Credit Cards And Consumer Loans
Section: Chapter Questions
Problem 5DTM
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These are Time value of Money questions:
QUESTION 1
Marina had an accident with her car and the repair bill came to $900. She didn't have any emergency fund money and no extra money in her monthly budget, so she ended up borrowing from a pay-day loan company. As long as she can pay the loan back at the end of the 30 day period she won't be charged any interest, technically. However, she did have to pay an $17 processing fee per $100 that she borrowed. If she were to consider the processing fee to represent interest paid in her formula, what would she discover to be the annual interest rate she was charged on her short term loan?
QUESTION 2
The end of the month has arrived and Marina was only able to save up a portion of the money she owed so far. This means she will have to delay paying off on the remaining amount. Besides the delayed payment fee that she is charged, she will now have to pay interest on the remaining amount until it is paid off. The APR (annual percentage rate) is 47%, but the interest is compounded daily. What is the effective interest rate that Marina will actually be paying?
Transcribed Image Text:QUESTION 1
Marina had an accident with her car and the repair bill came to $900. She didn't have any emergency fund money and no extra money in her
monthly budget, so she ended up borrowing from a pay-day loan company. As long as she can pay the loan back at the end of the 30 day period
she won't be charged any interest, technically. However, she did have to pay an $17 processing fee per $100 that she borrowed.
If she were to consider the processing fee to represent interest paid in her formula, what would she discover to be the annual interest rate she was
charged on her short term loan?
QUESTION 2
The end of the month has arrived and Marina was only able to save up a portion of the money she owed so far. This means she will have to
delay paying off on the remaining amount. Besides the delayed payment fee that she is charged, she will now have to pay interest on the
remaining amount until it is paid off. The APR (annual percentage rate) is 47%, but the interest is compounded daily.
What is the effective interest rate that Marina will actually be paying?
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