APR and EAR

Aug 2nd, 2016
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Solution to: A check- cashing store is in the business of making personal loans to walk-up customers.

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Question 6A) The APR is the interest rate per week times 52 weeks in a year, so: APR =52(8%) = 416%,EAR = (1 + 0.08)52 1 = 53.7 or 5,370%B) Calculation of APR 416 % / (1-0.08) = 452.1739 %Now rate per week = 452.1739 / 52 = 8.6956 % per weekEAR = (1+0.0869)52- 1 = 75.38 or 7,538%C)

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