Problemali loan inc is a pay-day loan company that is, Ask an Expert

Accounting

Problem:

Ali Loan Inc. is a pay-day loan company that is offering two alternate loan schemes for the possible borrowers. In a monthly compounding loan plan, you can borrow $100 today while you have to repay $105 at the end of the month. In a weekly compounding loan plan, you can borrow $100 today while you have to repay $101 a week-after.

Required:

Question 1: Calculate the APR and the EAR for both the plans.

Question 2: Which plan you should choose?

Note: Please provide through step by step calculations.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91170941

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