What is the apr and the ear of his friend loan

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Reference no: EM131960081

Use Excel, show process / steps when necessary

On a visit to his hometown, MBA candidate Ted runs into a pal from high school, walking into a payday loan outlet to get a 1-month loan. He tells Ted that the rate is only 20%. Ted recalls learning about APR and even remembers the formula for EAR is (1 + r)^n-1. He wants to warn his friend. What is the APR and the EAR of his friend’s loan? What is the flaw in the friend’s logic?

Reference no: EM131960081

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