Effective annual return friendlys earns on lending business

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1) Friendly’s Quick Loans, Inc., offers you $6.00 today but you must repay $7.85 when you get your paycheck in one week (or else). Requirement 1: What is 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?

2) Beginning three months from now, you want to be able to withdraw $3,900 each quarter from your bank account to cover college expenses over the next four years If the account pays .79 percent interest per quarter, how much do you need to have in your bank account today to meet your expense needs over the next four years?

Reference no: EM13880230


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