PPP Company Limited provides payday loan for an administration fee of $8 per loan, plus 5% of

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PPP Company Limited provides payday loan for an administration fee of $8 per loan, plus 5% of the principal borrowed, plus 50% effective annual rate of interest. RRR Company offers payday loan for a flat fee of $10 per contract, plus 59% effective annual rate of interest. Anne Chang wants to borrow $500 for 15 days.

Required for each company: (a) what is the cost in dollars of the loan? (8 marks) (b) what is the actual EAR of the loan (2 marks)?

Posted Date: May 20, 2024 01:05 AM

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