Tax Preparation Loan Many tax preparation organizations will prepay customers’ tax refunds if they pay a one-time finance charge. In essence, the customer is borrowing the money (the refund minus the finance charge) from the tax preparer, prepaying the interest (as in a discount note), and then repaying the loan with the tax refund. This procedure allows customers access to their tax refund money without having to wait. Joy had a tax refund of $743.21 due. She was able to get her tax refund immediately by paying a finance charge of $39.95. What annual simple interest rate, to the nearest hundredth of a percent, is Joy paying for this loan assuming a. the tax refund check would be available in 5 days? b. the tax refund check would be available in 10 days? c. the tax refund check would be available in 20 days?
Tax Preparation Loan Many tax preparation organizations will prepay customers’ tax refunds if they pay a one-time finance charge. In essence, the customer is borrowing the money (the refund minus the finance charge) from the tax preparer, prepaying the interest (as in a discount note), and then repaying the loan with the tax refund. This procedure allows customers access to their tax refund money without having to wait. Joy had a tax refund of $743.21 due. She was able to get her tax refund immediately by paying a finance charge of $39.95. What annual simple interest rate, to the nearest hundredth of a percent, is Joy paying for this loan assuming a. the tax refund check would be available in 5 days? b. the tax refund check would be available in 10 days? c. the tax refund check would be available in 20 days?
Solution Summary: The author explains the simple interest rate, which is r=409.01%, and the time t=5360year.
Tax Preparation Loan Many tax preparation organizations will prepay customers’ tax refunds if they pay a one-time finance charge. In essence, the customer is borrowing the money (the refund minus the finance charge) from the tax preparer, prepaying the interest (as in a discount note), and then repaying the loan with the tax refund. This procedure allows customers access to their tax refund money without having to wait. Joy had a tax refund of $743.21 due. She was able to get her tax refund immediately by paying a finance charge of $39.95. What annual simple interest rate, to the nearest hundredth of a percent, is Joy paying for this loan assuming
a. the tax refund check would be available in 5 days?
b. the tax refund check would be available in 10 days?
c. the tax refund check would be available in 20 days?
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