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You need a quick $400 to pay this month's cell phone bill. A"payday" loan company will end you that amount for one month, charging you a fee of "only" $45 (meaning you payback $445 in one month). The fee will be due on the day you pay off the loan .Recognizing that the fee is in reality the interest payment, a) what is the true Effective Annual Rate (EAR) on this loan? b) what is the Annual Percentage Rate (APR) on this loan?

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