A payday loan is structured to obscure the true interest rate you are paying. For example, in Washington, you pay a$30 "fee" for a two-week $200 payday loan (when you repay the loan, you pay $230). What is the effective annualinterest rate for this loan? (Assume 26 bi-weekly periods per year.)The effective annual interest rate is%. (Round to two decimal places.)

In a payday loan , for $200 , we need to pay $230 which means we need to calculate rate applied in 2…

Answered: A payday loan is structured to obscure…

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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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 $
. 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 ?
The simple interest charged on a 5-month loan of $51,000 is $356. Find the simple interest rate. (Round your answer to one decimal place.)
A floating rate mortgage loan is made for $190,000 for a 30-year period at an initial rate of 12 percent interest. However, the borrower and lender have negotiated a monthly payment of $1,520. Required: a. What will be the loan balance at the end of year 1? b. If the interest rate increases to 13 percent at the end of year 2, how much is the payment plus negative amortization in year 2 and year 5 if the payment remains at $1,520?
Suppose you run up a debt of $300 on a credit cardthat charges an annual rate of 12 percent, compounded annually. How much will you owe at theend of two years? Assume no additional chargesor payments are made
If $800 is borrowed and the interest after 6 months is $44, what is the annual interest rate for a simple interest loan?
What is the true effective annual interest rate of a small loan which states that the interest charged is only 2% per month of the unpaid balance?
Mr. Bean wants to borrow $9,100 for three years. The interest rate is 7.1% compounded monthly. a. What quarterly payments are required on the loan? (Do not round intermediate calculations and round your final answer to 2 decimal places.) PMT = 24 b. What will be the balance owed on the loan at the start of the third year? Balance owed=
If you withdraw part of your money from a certificate of deposit before the date of maturity, you must pay an interest penalty. Suppose you invested $7000 in a one-year certificate of deposit paying 8.1% interest. After 6 months, you decide to withdraw $7000. Your interest penalty is 3 months simple interest on the $7000. What interest penalty do you pay? (Round your answer to two decimal places)
You have a loan outstanding. It requires making nine annual payments of $7,000 each at the end of the next nine years. Your bank has offered to allow you to skip making the next eight payments in lieu of making one large payment at the end of the loan's term in nine years. If the interest rate on the loan is 8%, what final payment will the bank require you to make so that it is indifferent to the two forms of payment?
A 15-year loan requires month-end payments of $587.33 including interest at 8.4% compounded monthly. What is the balance on the loan after half of the payments have been made? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Balance on the loan
(Compound interest with nonannual periods) After examining the various personal loan rates available to you, you find that you can borrow funds from a finance company at an APR of 6 percent compounded quarterly or from a bank at an APR of 7 percent compounded monthly. Which alternative is more attractive? a. If you borrow $100 from a finance company at an APR of 6 percent compounded quarterly for 1 year, how much do you need to payoff the loan? $nothing (Round to the nearest cent.)

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