Payday loans (also called cash advance loans) are short-term, high-interest loans marketed as a way for people to borrow money for a short period of time until their paycheck amives. However, ke many other short-term loans, they should be used with extreme caution. Payday loans typically carry a fixed fee of $15 to $30 per $100 borrowed, and lenders sometimes demand access to wour checking account to make sure you will pay the fees. Complete parts (a) through (c) below Consider a payday loan that has a fixed fee of $17 per $100 borrowed that is due in 2 weeks (when your paycheck amives). If you borrow $800, principal) you owe the lender at the end of 2 weeks? total fee (not including your $800 $136 (Round to the nearest cent as needed) b. What is the interest rate for that 2-week period? 17% (Round to the nearest whole number as needed) What is the equivalent annual percentage rate (APR) for this loan? (Assume that there are 52 weeks in 1 year). How does this rate compare to other common types of loans, such as credit cards or mortgages? The pay-day loan has an APR of Thists [ than other common types of loans

Principles of Accounting Volume 1
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Author:OpenStax
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Chapter9: Accounting For Receivables
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Payday loans (also called cash advance loans) are short-term, high-interest loans marketed as a way for people to borrow money for a short period of time until their paycheck arrives. However,
like many other short-term loans, they should be used with extreme caution. Payday loans typically carry a fixed fee of $15 to $30 per $100 borrowed, and lenders sometimes demand access to
your checking account to make sure you will pay the fees. Complete parts (a) through (c) below
GSTID
a. Consider a payday loan that has a fixed fee of $17 per $100 borrowed that is due in 2 weeks (when your paycheck arrives). If you borrow $800, what is the total fee (not including your $800
principal) you owe the lender at the end of 2 weeks?
$136 (Round to the nearest cent as needed.)
b. What is the interest rate for that 2-week period?
17% (Round to the nearest whole number as needed.)
What is the equivalent annual percentage rate (APR) for this loan? (Assume that there are 52 weeks in 1 year). How does this rate compare to other common types of loans, such as credit
cards or mortgages?
Thists
The pay-day loan has an APR of
(Type an integer or a decimal.)
than other common types of loans.
Transcribed Image Text:Payday loans (also called cash advance loans) are short-term, high-interest loans marketed as a way for people to borrow money for a short period of time until their paycheck arrives. However, like many other short-term loans, they should be used with extreme caution. Payday loans typically carry a fixed fee of $15 to $30 per $100 borrowed, and lenders sometimes demand access to your checking account to make sure you will pay the fees. Complete parts (a) through (c) below GSTID a. Consider a payday loan that has a fixed fee of $17 per $100 borrowed that is due in 2 weeks (when your paycheck arrives). If you borrow $800, what is the total fee (not including your $800 principal) you owe the lender at the end of 2 weeks? $136 (Round to the nearest cent as needed.) b. What is the interest rate for that 2-week period? 17% (Round to the nearest whole number as needed.) What is the equivalent annual percentage rate (APR) for this loan? (Assume that there are 52 weeks in 1 year). How does this rate compare to other common types of loans, such as credit cards or mortgages? Thists The pay-day loan has an APR of (Type an integer or a decimal.) than other common types of loans.
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