According to a Jan. 19, 2015 article in the New York Times, a typical payday loan for $500 is paid back after 22 weeks and costs the borrower $1,500 in principal and interest. Lett be time in weeks and suppose that the borrower makes 22 equal weekly payments, i.e., $1,500/22 $68.18. What is the weekly interest rate, assuming continuous compounding? (Set up the usual model and solve it. You may need to use the solve function on your calculator to get a numerical value for r.)
According to a Jan. 19, 2015 article in the New York Times, a typical payday loan for $500 is paid back after 22 weeks and costs the borrower $1,500 in principal and interest. Lett be time in weeks and suppose that the borrower makes 22 equal weekly payments, i.e., $1,500/22 $68.18. What is the weekly interest rate, assuming continuous compounding? (Set up the usual model and solve it. You may need to use the solve function on your calculator to get a numerical value for r.)
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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Transcribed Image Text:According to a Jan. 19, 2015 article in the New York Times, a typical payday loan for $500 is paid
back after 22 weeks and costs the borrower $1,500 in principal and interest.
Lett be time in weeks and suppose that the borrower makes 22 equal weekly
payments, i.e., $1,500/22 $68.18. What is the weekly interest rate, assuming continuous
compounding? (Set up the usual model and solve it. You may need to use the solve function
on your calculator to get a numerical value for r.)
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