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.)
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 3P: Del Hawley, owner of Hawleys Hardware, is negotiating with First City Bank for a 1-year loan of...
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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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