### Calculating EAR

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Calculating EAR

Friendly’s Quick Loan Inc., offers you “five for four, or I knock on your door.” This means you get \$4 today and repay \$5 when you get your paycheck in one week (or else), What’s the effective annual return Friendly’s earns on this lending business? If you were brave enough to ask, what APR would friendly’s say you were paying?

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