Question: With a $ 1 0 , 0 0 0 kitty, you decide to start a payday loan company. The average loan size is $ 3

With a $10,000 kitty, you decide to start a payday loan company. The average
loan size is $390 for two weeks and it costs you $10 to process a loan with a payment
processer (e.g., a larger bank). What is the minimum interest rate you should charge if you
would like to make a total revenue of $500 from your investment kitty every two weeks?
What is the average payday loan fee? How do these answers change if 20% of your loans
default (i.e., are never paid back)?

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