The Question had to do with finding interest rate for a loan in amount of $40 that was to be paid back in a week's time with $50
Here is what I think the Annual Effective Rate is for a weekly interest rate of 25%
Is it correct?
Thanks in Advance
The Question had to do with finding interest rate for a loan in amount of $40 that was to be paid back in a week's time with $50
Here is what I think the Annual Effective Rate is for a weekly interest rate of 25%
Is it correct?
Thanks in Advance
$10 is interest for 1 week: so for a year, interest would be 52 * 10 = $520
40(1 + i)^1 = 560
1 + i = 560/40 = 14
i = 14 - 1 = 13
So annual interest rate = 1300% !!
And that's keeping it simple: no compounding.