help
Date: Fri, 05/09/2008 - 09:26
I was wondering if you would be able to help me with this question?
A check-cashing store is in the business of making personal loans to walk -up customers. The stores makes only one-week loan at 8% interest per week.
a. The store must report an apr of ________% to its customers. The customers are actually paying an EAR of _______%.
Thanks So much
A check-cashing store is in the business of making personal loans to walk -up customers. The stores makes only one-week loan at 8% interest per week.
a. The store must report an apr of ________% to its customers. The customers are actually paying an EAR of _______%.
Thanks So much
Welcome to the community! Numbers with a percentage sign beside
Welcome to the community! Numbers with a percentage sign beside them are my weakest downfall! lol But I am sure that someone will be along to help you out as soon as possible. :)
The apr they have to disclose is actually the same as the effect
The apr they have to disclose is actually the same as the effective rate. Since the resulting yield is a time-price differential, you need to know the loan amount and points (document fee) in order to calculate it.
I think you may be confusing EAR with the nominal rate. To calculate the nominal rate, you would multiply by 52 (since there's 52 weeks in a year). 8*52 = 416%
Document fees kick up the effective rate. If they don't charge a document fee, nominal and effective will be the same.
