You are down on your luck and need a loan, quick! You locate Mr. Loa N. Shark who advertises weekly loans for “an almost imperceptibly small rate” of only 3%, prepaid at the time of the loan. You sign over your federal tax refund for $1,000 to Mr. Shark, with proof that it is correct and will be forth coming from the IRS in one week. Solve, a. How much money does Mr. Shark hand you? b. How much weekly interest are you really paying? c. What is the nominal annual interest rate? d. What is the effective annual interest rate?
You are down on your luck and need a loan, quick! You locate Mr. Loa N. Shark who advertises weekly loans for “an almost imperceptibly small rate” of only 3%, prepaid at the time of the loan. You sign over your federal tax refund for $1,000 to Mr. Shark, with proof that it is correct and will be forth coming from the IRS in one week. Solve, a. How much money does Mr. Shark hand you? b. How much weekly interest are you really paying? c. What is the nominal annual interest rate? d. What is the effective annual interest rate?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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You are down on your luck and need a loan, quick! You locate Mr. Loa N. Shark who advertises weekly loans for “an almost imperceptibly small rate” of only 3%, prepaid at the time of the loan. You sign over your federal tax refund for $1,000 to Mr. Shark, with proof that it is correct and will be forth coming from the IRS in one week. Solve, a. How much money does Mr. Shark hand you? b. How much weekly interest are you really paying? c. What is the nominal annual interest rate? d. What is the effective annual interest rate?
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