You are considering taking out a loan from the so-called “Tiger B. Shark” finance company. The company’s leaflet states
Posted: Mon Nov 15, 2021 5:05 pm
You are considering taking out a loan from the so-called “Tiger
B. Shark” finance company. The company’s leaflet states that the
loan you plan to take will be settled on a “four-for-five” weekly
basis (i.e., For every four dollars borrowed, return five dollars
in total in a week). You ask your friend, who works in the banking
industry, for advice on the following issues related to the
loan.
e loan. a) What is the weekly interest rate charged on the loan
as implied by the phrase “four-forfive weekly basis” in the
leaflet?
What is the effective yearly rate of this loan? Assume that each
year has exactly 52 weeks. (The final answer should be rounded to
two decimal places in percentage.)
Suppose you plan to borrow $10,000 under the terms set out in
the leaflet for one year (counted as 52 weeks according to the loan
contract).
If you make no interest or principal repayments during the
period, how much will you have to repay in 52 weeks and how much
interest in total will you have to pay for the loan? [Note: Round
the final answer to an integer.]
B. Shark” finance company. The company’s leaflet states that the
loan you plan to take will be settled on a “four-for-five” weekly
basis (i.e., For every four dollars borrowed, return five dollars
in total in a week). You ask your friend, who works in the banking
industry, for advice on the following issues related to the
loan.
e loan. a) What is the weekly interest rate charged on the loan
as implied by the phrase “four-forfive weekly basis” in the
leaflet?
What is the effective yearly rate of this loan? Assume that each
year has exactly 52 weeks. (The final answer should be rounded to
two decimal places in percentage.)
Suppose you plan to borrow $10,000 under the terms set out in
the leaflet for one year (counted as 52 weeks according to the loan
contract).
If you make no interest or principal repayments during the
period, how much will you have to repay in 52 weeks and how much
interest in total will you have to pay for the loan? [Note: Round
the final answer to an integer.]