A payday loan is structured to obscure the true interest rate you are paying. For example, in Washington, you pay a $35 "fee" for a two-week $205 payday loan (when you repay the loan, you pay $240). What is the effective annual interest rate for this loan? (Assume 26 bi-weekly periods per year.) The effective annual interest rate is%. (Round two decimal places.)

A payday loan is structured to obscure the true interest rate you are paying. For example, in Washington, you pay a $35 "fee" for a two-week $205 payday loan (when you repay the loan, you pay $240). What is the effective annual interest rate for this loan? (Assume 26 bi-weekly periods per year.) The effective annual interest rate is%. (Round two decimal places.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A loan of $1420 taken out on June 7 requires three payments. The first payment is due on July 7. The second payment is twice as large as the first payment and is due on August 19. The final payment, due on November 2, is three times as large as the first payment. If the focal date is June 7, what is the size of each of the three payments at an interest rate of 4.9%? The first payment is $ the second payment is $, and the third payment is $ (Round the final answers to the nearest cent as needed. Round all intermediate values to sx decimal places as needed)
One bank offers to loan you money at an interest rate of 12% compounded quarterly, and another bank offers to loan you money at 11.8% compounded continuously. Which loan would you prefer, and why?
Some lenders offer loans with biweekly payments rather than monthly payments. Investigate the effect of this on home loans by finding the payment and total interest on a thirty-year simple interest amortized loan of $150,000 at 13% interest. (Round your answers to the nearest cent.) (a) if payments are made monthly payment $ total interest $ (b) if payments are made biweekly payment $ total interest $
Assume that interest is the only finance charge. Use financial calculator to answer the questions. How much interest would be paid on a $8,000 installment loan to be repaid in 48 monthly installments of $211.10? Round the answer to 4 decimal places. % per month What is the APR on this loan? Round the answer to 2 decimal places. %
Find the APR of the loan given the amount of the loan, the number and type of payments, and the add-on interest rate. Loan amount, $9,000; three yearly payments; rate = 8% The annual percentage rate is%. (Type an integer or a decimal.)
. Calculating EAR First National Bank charges 11.4 percent compounded monthly on its business loans. First United Bank charges 11.6 percent compounded semiannually. As a potential borrower, to which bank would you go for a new loan ?
To borrow $2,400, you are offered an add-on interest loan at 10.4 percent with 12 monthly payments. Compute the 12 equal payments. Use the amount you borrowed and the monthly payments you computed to calculate the APR of the loan. Then, use that APR to compute the EAR of the loan. Note: Do not round intermediate calculations and round your final answer to 2 decimal places. Equal payment Effective annual rate. %
A credit card quotes a rate as 21.5% compounded monthly. a) What is the effective annual interest rate? b) What would the effective annual interest rate be with daily compounding (assume the 360 day convention)?
The rate quoted by Big Bank on a car loan is 8 percent. The annual rate of inflation is currently 1.5 percent. What is the approximate real interest rate paid by the consumer on this loan?
The loan below was paid in full before its due date: (a). Obtain the value of h from the annual percentage rate table. Then (b) use the actuarial method to find the amount of unearned interest, and (c) find the payoff amount. Regular Monthly Payment $494.14 APR 4.0% Remaining Number of Scheduled Payments after Payo!! 12 Click the icon to view the annual percentage rate table. (b) The unearned interest is (Round to the nearest cent as needed) (c) The payoff amount is $(Round to the nearest cent as needed)
Suppose you have received a credit card offer from a bank that charges interest at 1.1% per quarter, compounded quarterly. What is the nominal interest (annual percentage) rate for this credit card? What is the effective annual interest rate? The nominal interest (annual percentage) rate for this credit card is %. (Round to one decimal place.)
HW#3 Consider a coupon bond that has a $1,000 par value and a coupon rate of 10%. The bond is currently selling for $1,150 and has 8 years to maturity. What is the bond’s yield to maturity? A 10-year, 7% coupon bond with a face value of $1,000 is currently selling for $871.65. Compute your rate of return if you sell the bond next year for $880.10. Consider the decision to purchase either a 5-year corporate bond or a 5-year municipal bond. The corporate bond is a 12% annual coupon bond with a par value of $1,000. It is currently yielding 5%. The municipal bond has an 8.5% annual coupon and a par value of $1,000. It is currently yielding 7%. Which of the two bonds would be more beneficial to you? Assume that your marginal tax rate is 35%. Calculate the duration of a $1,000 6% coupon bond with three years to maturity. Assume that all market interest rates are 7%. Consider the bond in the previous question. Calculate the expected price change if interest rates drop to 6.75% using the…

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