Friendly's Quick Loans, Inc., offers you $8.25 today but you must repay $10.45 when you get your paycheck in one week (or else). a. What is the effective annual return Friendly's earns on this lending business? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If you were brave enough to ask, what APR would Friendly's say you were paying? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, eg., 32.16.) a. Effective annual return % % b. Annual percentage rate
Friendly's Quick Loans, Inc., offers you $8.25 today but you must repay $10.45 when you get your paycheck in one week (or else). a. What is the effective annual return Friendly's earns on this lending business? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If you were brave enough to ask, what APR would Friendly's say you were paying? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, eg., 32.16.) a. Effective annual return % % b. Annual percentage rate
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 14P
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Question
![Friendly's Quick Loans, Inc., offers you $8.25 today but you must repay $10.45 when you
get your paycheck in one week (or else).
a. What is the effective annual return Friendly's earns on this lending business? (Do not
round intermediate calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
b. If you were brave enough to ask, what APR would Friendly's say you were paying? (Do
not round intermediate calculations and enter your answer as a percent rounded to
2 decimal places, e.g., 32.16.)
a. Effective annual return
%
b. Annual percentage rate
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8ad87420-52d2-4e34-815e-eb9bcb5c95c0%2F1df9188b-4617-40fe-805c-e6962a83bf56%2Fsul4i4_processed.png&w=3840&q=75)
Transcribed Image Text:Friendly's Quick Loans, Inc., offers you $8.25 today but you must repay $10.45 when you
get your paycheck in one week (or else).
a. What is the effective annual return Friendly's earns on this lending business? (Do not
round intermediate calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
b. If you were brave enough to ask, what APR would Friendly's say you were paying? (Do
not round intermediate calculations and enter your answer as a percent rounded to
2 decimal places, e.g., 32.16.)
a. Effective annual return
%
b. Annual percentage rate
%
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