one week (or else). a. If you were brave enough to ask, what APR would Friendly's say you (Do not round intermediate calculations and enter your answer rounded to 2 decimal places, e.g., 32.16.) b. What's the effective annual return Friendly's earns on this lending busin round intermediate calculations and enter your answer as a percent r decimal places, e.g., 32.16.) a. APR b. EAR 15.76 % 17.04 %
one week (or else). a. If you were brave enough to ask, what APR would Friendly's say you (Do not round intermediate calculations and enter your answer rounded to 2 decimal places, e.g., 32.16.) b. What's the effective annual return Friendly's earns on this lending busin round intermediate calculations and enter your answer as a percent r decimal places, e.g., 32.16.) a. APR b. EAR 15.76 % 17.04 %
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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E13
Transcribed Image Text:-S
aw
11
Friendly's Quick Loans, Incorporated, offers you "$3.30 for $4.30 or I knock on your
door." This means you get $3.30 today and repay $4.30 when you get your paycheck in
one week (or else).
a. 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.)
b. What's 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.)
a. APR
b. EAR
*
80
15.76 %
17.04 %
000
000
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The APR is just like nominal interest rate without compounding but effective interest rate is after considering the impact of compounding.
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