Compound Frequency Payday loans are very short-term loans that charge very high interest rates. You can borrow $1,400 today and repay $1,666 in two weeks. What is the compound annual rate implied by this 19 percent rate charged for only two weeks?

Compound Frequency Payday loans are very short-term loans that charge very high interest rates. You can borrow $1,400 today and repay $1,666 in two weeks. What is the compound annual rate implied by this 19 percent rate charged for only two weeks?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: A credit card company compounds monthly and charges an interest of 1 ½ % per month. What is the…

A: Effective Interest Rate It is a rate that discounts the approximate future cash flows over the…

Q: You just borrowed $800,000 using a 25 year home loan that's interest-only for the first 2 years, and…

A: Several statements have been made about the loan that an interest only loan for the first two years…

Q: Marco Company shows Job 306 Job 307 Job 308 Balances on March 31 Direct materials used (in March)…

A: The production cost refers to the cost incurred by the factory for producing the goods. Thus the…

Q: A bank that provides overdraft protection charges 12 percent for each $100 (or portion of $100)…

A: Part (a)The overdraft protection charge = 12% for each $100 (or portion of $100) borrowedThus 12% is…

Q: Suppose a bank offer a loan for 2 years with fixed interest rate 9% per year compounded daily.…

A: Effective annual interest rate(EAR) refers to the actual interest rate which is received on deposits…

Q: at period of time could you pay back a loan of $3000 by making monthly payments of $110 if interest…

A: Loans are paid by the equal amount of monthly payments these payments carry the payment of principal…

Q: It is still three weeks until payday and you have run out of cash. You have just received an…

A: The rate that is actually earned on an investment is called the effective interest rate. It is also…

Q: a) If you owe $10,940 and have 4 months to pay it off at the end of each month, assume an effective…

A: Interest Payment: It is the interest payment made on the loan outstanding at a specific interest…

Q: Hard Rock Paving Company is applying for a loan. It is your job to determine how much they will be…

A: A loan is a facility provided by the lender to the borrower to take a lump sum amount of money and…

Q: 2. Consider a 25-year fixed-rate mortgage for $600,000 at a nominal rate of 8%. What is the…

A: A mortgage is a loan taken out for the purchase of a property. The property itself acts as…

Q: A payday lender offers 7 day loans at 7.6% discount interest per week. For example, if you borrow…

A: Effective annual rate refers to the percentage of return after the effect of compounding for the…

Q: Suppose a $18,689 loan has an annual compound interest rate of 3.1% with weekly compounding. If the…

A: Details given to us in the question is as follows: Present value of loan =$18689 Interest rate =…

Q: y terms require the first payment to be made at the moment the money is lent $42 every month, the…

A: Value of loan is the present value of payments done based on time value of money and interest rate…

Q: You borrowed $5,000 for 24 months at 6% interest. What is the total payback on the Single Payment…

A: Total payback on the Single Payment loan - It es the payback of the loan at a single payment…

Q: You have $1000 in an account earning 4% APR compounded daily. At the same time, you are to pay a…

A: Interest rate compounded daily is 4% Amount in account(PV) is $1000 Amount needs to pay in future…

Q: Use Excel to solve this problem. An $11,000 mortgage has a 30-year term and a 6% nominal interest…

A: >Please refer to the below spreadsheet for calculation and answer. Cell reference was also…

Q: The annual interest rate on a credit card is 13.99%. If a payment of $200.00 is made each month, how…

A: Number of periods, The number of periods is used to calculate the number of years it will take to…

Q: How long would

A: Given information : Repayment amount $ 25.00 Interest rate 19% Loan amount $2,000.00…

Q: he going rate on student loans is quoted as 8% APR. The terms of the loans call for monthly…

A: Effective annual interest rate = (1 + (nominal rate / number of compounding periods)) ^ (number of…

Q: Suppose your credit card issuer states that it charges a 17.00% nominal annual rate, but you must…

A: When the borrower borrows a loan from the lender, he has to pay a rate of interest on the borrowed…

Q: The annual interest rate on a credit card is 17.99% if a payment of $400 00 is made each month, how…

A: Compound = monthly = 12Interest Rate = rate = 17.99 / 12 = 1.49916666667%Monthly Payment = pmt =…

Q: You ran a little short on your spring break vacation, so you put $2,000 on your credit card. You can…

A: Banks issue credit cards to its customers. The customers use the credit cards for making purchases,…

Q: You take out a $7,400 car loan that calls for 36 monthly payments starting after 1 month at an APR…

A: It is a case of amortization of a car loan that is to be repaid in 3 years as a monthly payment or…

Q: ts, which amounts to monthly compounding. What is the effective annual rate? a. 24.23%

A: Investors and consumers can compare interest rates across a range of financial products with…

Q: Consider a 48 month amortizing car loan with 6% APR and monthly payments. Which of the following…

A: Effective annual rate = (1+Monthly interest rate)12-1

Q: 5. An interest buydown program offers to reduce interest rates by 4% from the base rate. Suppose the…

A: Loan amount= $8000Interest rate before buydown= 8%(0.667% compounded monthly)Interest rate after…

Q: The maturity value of a three-month loan of 2,500 dollars is 2,577 dollars. Find the simple annual…

A: Simple interest dose not take compounding into consideration.

Q: A consumer loan requires monthly payments, in e amounts, $700.00. The next payment is due in or…

A: Effective rate is the rate after considering the impact of compounding on the interest rate.

Q: effective interest rate

A: Formula: effective interest rate= [1+ interest rate/period)^ period]-1 *100

Q: A payday loan is structured to obscure the true interest rate you are paying. For example, in…

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

Q: Sandra owns a small manufacturing company, Tamarisk Camping Stuff Co. The company has been working…

A: Target cost is the difference between target sales revenue and target desired return on investment.…

Q: A $230,000 mortgage has a stated annual rate of 4.5% on a 30 year loan. Approximately how many…

A: Stated annual interest rate is the rate of interest that does not take into account the effect of…

Q: Suppose that your bank has a minimum loan charge of $48 when you borrow at 6% ordinary interest for…

A: In contrasts to a fee that the borrower may pay the lender or another party, interest is a payment…

Q: you miss the 10th to 13th payments of a loan. The loan payments are 519.27 each month and the…

A: Laon outstanding = the present value of all future payments at applicable interest rate. And the…

Q: The annual interest rate on a credit card is 14.99 %. If a payment of $200 .00 is made each…

A: Information provided:

Q: How many months will it take to pay off a $525 loan, with monthly payments of $15 at the end of each…

A: Compounded quarterly means the interest on the outstanding balance is calculated quarterly and added…

Q: Have trouble doing compound interest problems. Example is if monthly payment is $100 and APR is 2%…

A: APR is 2%. Monthly payment is $100. Interest per month would be (0.02/12) = 0.001667.

Question

100%

Compound Frequency Payday loans are very short-term loans that charge very high interest rates. You can borrow $1,400 today and repay $1,666 in two weeks. What is the compound annual rate implied by this 19 percent rate charged for only two weeks?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Tr.17.
"Joey has an outstanding credit card balance of $21,155 carrying an APR finance rate of 11.7% (note interest will be compounded monthly) and requiring minimum monthly payments of $430 per month - If only the minimum monthly payment is made, how many months will it take to completely pay off this credit card balance (assuming no new charges)?" 49.2 75.2 60.3 55.0 68.2 69.8 67.3
Jane Doe Enterprises is offering 6% APR on 6 year loans. You want to borrow money, but you can't afford more than $742 per month. What's the most can you borrow today so that you don't owe more than $742 per month?
How many month deposits of $350 each, and what final deposit one period later, will be necessary to accumulate $17581, if interest is at 16.82 % compounded daily? What is number of regular deposits ? What is final deposit one period later after last regular deposit ?
Your credit card carries an annual rate of 21.6% APR with a minimum payment due monthly. If you don’t pay the monthly minimum amount for a year, what is its EAR?
A bank charges a 12% bank discount on short-term loans. A borrower needs GH¢2000cash to be repaid with interest in 9 months. What size loan should he ask for, and how much interest will he pay?
Some banks now have biweekly mortgages (that is, with payments every other week). Compare a 20-year, $130,000 loan at 8.1% by finding the payment size and the total interest paid over the life of the loan under each of the following conditions. (Round your answers to the nearest cent.) (a) Payments are monthly, and the rate is 8.1%, compounded monthly. payment size $ total interest $ (b) Payments are biweekly, and the rate is 8.1%, compounded biweekly. (Assume a standard 52-week year.) payment size $ total interest $
Some banks now have biweekly mortgages (that is, with payments every other week). Compare a 20-year, $130,000 loan at 7.5% by finding the payment size and the total interest paid over the life of the loan under each of the following conditions. (Round your answers to the nearest cent.) (a) Payments are monthly, and the rate is 7.5%, compounded monthly. payment size $ total interest $ (b) Payments are biweekly, and the rate is 7.5%, compounded biweekly. (Assume a standard 52-week year.) payment size $ total interest $
How many weeks would it take to increase the debt of a simple discount loan by 187% if the annual simple discount rate is 27%? Round your answer to the nearest week.
Assume you have a balance of $1000 on a credit card with an APR of 24%, or 2% per month. You start making monthly payments of $200, but at the same time you charge an additional $90 per month to the credit card. Assume that interest for a given month is based on the balance for the previous month. The following table shows how you can calculate your monthly balance. Complete and extend t the debt is paid off. How long does it take to pay off the credit card debt?
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?
How many weeks would it take to increase the debt of a simple discount loan by 104% if the annual simple discount rate is 29%?