What is the monthly percent yield

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Problem - A loan-shark (a person who loans money at very high rates of interest) lends money at a nominal interest rate of 100% per month (every 30 days). This 100% MPR or monthly percentage rate is compounded daily.

a) If you borrow from this person and pay him back in 30 days, what is the actual interest rate for your loan, in other words, what is the monthly percent yield (MPY)?

b) If you pay back the loan in equal payments every six days, what is the effective interest rate for your payments?

c) Calculate the MPY (monthly percent yield) based on the effective interest rate of your "every six day" payment schedule.

d) If you had borrowed $100 and not repaid it for 1 year (365 days), what would your payment be?

Reference no: EM132800997

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