A check-cashing store is in the business of making personal loans to walk-up customers. The store makes only one-week loans at 7 percent interest per week.

a. What APR must the store report to its customers? What EAR are customers actually paying?

b. Now suppose the store makes one-week loans at 7 percent discount interest per week. What's the APR now? The EAR?

c. The check-cashing store also makes one-month add-on interest loans at 7 percent discount interest per week. Thus if you borrow $100 for one month (four weeks), the interest will be ($100 x 1.074) - 100 = $31.08. Because this is discount interest, your net loan proceeds today will be $68.92. You must then repay the store $100 at the end of the month. To help you out, though, the store lets you pay off this $100 in installments of $25 per week. What is the APR of this loan? What is the EAR?