Quesion ( canyou check my solution and tell me if i did anymistake) you need tob

Question

Quesion    (canyou check my solution and tell me if i did anymistake)          you need toborro $55 today from a loan shark and you must pay $65 back whenyou get your pay check in one week? what is Apr would yoube paying solution A)    pv(1+r)=fv   55(1+r)^1=65     r=.1818    Apr= (.1818)(52) = 945.36% b) EAR                    =[1+(apr/m)]^m=[1+945.36/52]^52 _1 = 591853.04% c) what type of loan is this       i think its pure discount loan Quesion    (canyou check my solution and tell me if i did anymistake)          you need toborro $55 today from a loan shark and you must pay $65 back whenyou get your pay check in one week? what is Apr would yoube paying solution A)    pv(1+r)=fv   55(1+r)^1=65     r=.1818    Apr= (.1818)(52) = 945.36% b) EAR                    =[1+(apr/m)]^m=[1+945.36/52]^52 _1 = 591853.04% c) what type of loan is this       i think its pure discount loan          you need toborro $55 today from a loan shark and you must pay $65 back whenyou get your pay check in one week? what is Apr would yoube paying solution A)    pv(1+r)=fv   55(1+r)^1=65     r=.1818    Apr= (.1818)(52) = 945.36% b) EAR                    =[1+(apr/m)]^m=[1+945.36/52]^52 _1 = 591853.04% c) what type of loan is this       i think its pure discount loan A)    pv(1+r)=fv   55(1+r)^1=65     r=.1818    Apr= (.1818)(52) = 945.36% b) EAR                    =[1+(apr/m)]^m=[1+945.36/52]^52 _1 = 591853.04% c) what type of loan is this       i think its pure discount loan

Explanation / Answer

Here your current balance is $55 and the interest is $10for One week. Recall there are 52 weeks in a year.
Divide the interest by the outstanding balance: $10/$55 = 0.182
Multiply the answer by 52 weeks: 52 X 0.182 = 9.454
Then multiply this by 100 to obtain your APR: 9.454 X 100 = 945.4%
Therefore APR = 945.4%
Divide the interest by the outstanding balance: $10/$55 = 0.182
Multiply the answer by 52 weeks: 52 X 0.182 = 9.454
Then multiply this by 100 to obtain your APR: 9.454 X 100 = 945.4%
Therefore APR = 945.4%
2. EAR = [1 + (i/n)]^n - 1; where i = stated annual interest rate = 945.4% n = number of compounding periods = 52 weeks 2. EAR = [1 + (i/n)]^n - 1; where i = stated annual interest rate = 945.4% n = number of compounding periods = 52 weeks So EAR = (1+9.454/52)^52 - 1 = 5920.53%
3. In my view, as you are borrowing money from a Loan shark,it is a purely personal loan.

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