Question: Friendly's Quick Loans, Inc., offers you $3.90 for $4.90 or I knock on your door. This means you get $3.90 today and repay $4.90 when

Friendly's Quick Loans, Inc., offers you "$3.90 for $4.90 or I knock on your door." This means you get $3.90 today and repay $4.90 when you get your paycheck in one week (or else).

a. If you were brave enough to ask, what APR would Friendly's say you were paying?

b. What's the effective annual return Friendly's earns on this lending business?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Friendly's Quick Loans, Inc., offers you "$3.90 for $4.90 or I knock on your door." This means you get $3.90 today and repay $4.90 when you get your paycheck in one week (or else.)

Friendlys Quick Loans, Inc., offers you $3.90 for $4.90 or I knock on your door. This means you get $3.90 today and repay $4.90 when you get your paycheck in one week (or else). If you were brave...

Friendly's Quick Loans, Inc., offers you "$3.90 for $4.90 or I knock on your door." This means you get $3.90 today and repay $4.90 when you get your paycheck in one week (or else). a. If you were...

Friendly's Quick Loans, Incorporated, offers you " $ 3 . 9 0 for $ 4 . 9 0 or I knock on your door." This means you get $ 3 . 9 0 today and repay $ 4 . 9 0 when you get your paycheck in one week ( or...

1.Calculating OCF Ranney, Inc., has sales of $14,900, costs of $5,800, depreciation expense of $1,300, and interest expense of $780. If the tax rate is 40 percent, what is the operating cash flow, or...

Calculating EAR Friendly's Quick Loans, Inc., offers you "Three for four, or I knock on your door." This means you get $3 today and repay $4 when you get your paycheck in one week (or else). What's...

Friendlys Quick Loans, Inc., offers you five for six or I knock on your door. This means you get $5.00 today and repay $6.00 when you get your paycheck in one week (or else). Whats the effective...

Friendlys Quick Loans, Inc., offers you $4.90 for $5.90 or I knock on your door. This means you get $4.90 today and repay $5.90 when you get your paycheck in one week (or else). If you were brave...

Problem 15..please compute and explain how you get the get your answer, thank you. Chapter 6 Discounted Cash Flow Valuation ied an in 3 percent, value at a x X2 per year quired re- be if the exchange...

LO 4 1 4 . Calculating EAR First National Bank charges 1 3 . 8 percent compounded monthly on its business loans. First United Bank charges 1 4 . 1 percent compounded semiannually. As a potential...

Discuss how the availability of disease management, training programs, and a nursing hotline might help with health benefits costs.

1. Suppose that the annual interest rate is 2.5 percent in Korea and 4.2 percent in Germany, and that the spot exchange rate is Won1933.2/ and the forward exchange rate, with one-year maturity, is...

Question content area top Part 1 Amortization refers to the process in which a large proportion of the early payments of an installment loan goes to cover interest, and the later payments have a...

The force constant of a massless spring is 2 5 . 0 N / m . A mass of 0 . 4 5 kg is oscillating in simple harmonic motion at the end of the spring

(Journal entries) Clara Inc. produces custom-made floor tiles. During April 2006, the following information was obtained relating to operations and production: 1. Direct material purchased on...

(Cost flows) Brooke Landscapes began operations on May 1, 2006. Its Work in Process Inventory account on May 31 appeared as follows: The company applies overhead on the basis of direct labor cost....

(Journal entries; cost flows) The following costs were incurred in February 2006 by Store-It-All, which produces customized storage buildings. The balance in Work in Process Inventory on February 1...