Payday Loan Recommendation and Justification
A consumer is considering two payday loan options. The first is a $375 loan for a two-week period with a $50 finance charge. The second is a $400 loan for a three-week period with an $80 finance charge. Analyze both loan options by calculating their respective Annual Percentage Rates (APRs), assuming a 52-week year. Based on your analysis, which loan, if any, would you recommend? Justify your recommendation by explaining the significance of the APR calculation and considering other factors that might influence the consumer's decision.
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Social Science
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CORE Econ
Economics
Economy
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Evaluation in Bloom's Taxonomy
Cognitive Psychology
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Payday Loan Cost Comparison
A consumer is comparing two short-term loan options. Option A is a $375 loan for a two-week period with a $50 finance charge. Option B is a $400 loan for a three-week period with an $80 finance charge. Assuming a 52-week year, which of the following statements accurately compares the Annual Percentage Rate (APR) of the two options?
A consumer is comparing two short-term loan options. The first is a $375 loan for a two-week period with a $50 finance charge. The second is a $400 loan for a three-week period with an $80 finance charge. Based on this information, the loan with the higher dollar finance charge ($80) also has the higher Annual Percentage Rate (APR).
Calculating Payday Loan APR
A consumer is comparing two short-term loans. Loan A is for $375 for a two-week period with a $50 finance charge. Loan B is for $400 for a three-week period with an $80 finance charge. Match each financial metric with its correct calculated value or conclusion, assuming a 52-week year.
Payday Loan Recommendation and Justification
A consumer wants to determine which of two short-term loans is more expensive in terms of its annualized interest rate. The first loan is for $375 for a two-week period with a $50 finance charge. The second is for $400 for a three-week period with an $80 finance charge. Arrange the following steps in the correct logical order to perform this comparison, assuming a 52-week year.
A consumer is comparing two short-term loans. The first is a $375 loan for a two-week period with a $50 finance charge. The second is a $400 loan for a three-week period with an $80 finance charge. When calculating the Annual Percentage Rate (APR) for both loans (assuming a 52-week year), the APR for the second loan is ____ percentage points higher than the APR for the first loan. (Enter a numerical value rounded to one decimal place).
Critique of a Loan Comparison
Evaluating a Peer's Financial Advice