Problem 6.77 – APR and EAR for Different Loan Structures at a Check-Cashing Store

Fundamentals of Corporate Finance

Ross, Westerfield, and Jordan

13th Edition

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Difficulty – Hard

Examine a check-cashing store that makes personal loans with various interest structures. The store offers one-week loans at an interest rate per week, one-week loans at a discount interest rate per week, and one-month add-on interest loans at a discount interest rate per week with weekly installments. Calculate the APR and EAR for each of these loan structures. Find the APR and EAR of the loan.

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