Ron Larson
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Chapter 6 Review Exercises

Chapter 6 Review Exercises
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  • 1. Payday Loans

    Payday loans are short-term loans that are typically due the next time you receive a paycheck. The tables show rates at two different payday loan companies. You obtain a 30-day payday loan on September 14. What is the due date?

    • Worked-Out Solution

      September has 30 days. So, the due date is October 14.

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 |    \\   | ||__     \___ \\ | || | || |  --  // 
 | [] ||   | ||__     /    // | \\_/ || |  --  \\ 
 |  __//   |_____||  /____//   \____//  |______// 
 |_|`-`    `-----`  `-----`     `---`   `------`  
 `-`
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  • 2. Payday Loans

    Payday loans are short-term loans that are typically due the next time you receive a paycheck. The tables show rates at two different payday loan companies. You obtain a $100 payday loan with a 14-day term. How much is due at the end of 14 days?

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               _    _     _____     _____             
    ___   | || | ||  |__  //   |  ___||   ____    
   /   || | || | ||    / //    | ||__    |    \\  
  | [] || | \\_/ ||   / //__   | ||__    | [] ||  
   \__ ||  \____//   /_____||  |_____||  |  __//  
    -|_||   `---`    `-----`   `-----`   |_|`-`   
     `-`                                 `-`
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  • 3. Truth in Lending

    Payday loans are short-term loans that are typically due the next time you receive a paycheck. The tables show rates at two different payday loan companies.

    Complete the Truth in Lending disclosure for a $255 payday loan with a 14-day term.

    • Worked-Out Solution

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      ____      _____    __   __    ______    _____   
 |  _ \\   |  ___||  \ \\/ //  /_   _//  /  ___|| 
 | |_| ||  | ||__     \   //    -| ||-  | // __   
 | .  //   | ||__     / . \\    _| ||_  | \\_\ || 
 |_|\_\\   |_____||  /_//\_\\  /_____//  \____//  
 `-` --`   `-----`   `-`  --`  `-----`    `---`
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  • 4. Truth in Lending

    Payday loans are short-term loans that are typically due the next time you receive a paycheck. The tables show rates at two different payday loan companies.

    Complete the Truth in Lending disclosure for a $500 payday loan with a 30-day term.

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      _  _      ___     ______    _    _     ____    
 | \| ||   / _ \\  |      \\ | || | ||  |  _ \\  
 |  ' ||  / //\ \\ |  --  // | || | ||  | |_| || 
 | .  || |  ___  |||  --  \\ | \\_/ ||  | .  //  
 |_|\_|| |_||  |_|||______//  \____//   |_|\_\\  
 `-` -`  `-`   `-` `------`    `---`    `-` --`
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  • 5. Finding the APR

    Payday loans are short-term loans that are typically due the next time you receive a paycheck. The tables show rates at two different payday loan companies.

    Find the APR for a $200 payday loan with a term of (a) 14 days and (b) 30 days.

    • Worked-Out Solution

      1. The annual percentage rate for the loan is 460%.

      2. The annual percentage rate for the loan is 226.54%.

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                _____     _____     _____     ______  
    ___    |  ___||  / ____||  |  ___||  /_   _// 
   /   ||  | ||__   / //---`'  | ||__      | ||   
  | [] ||  | ||__   \ \\___    | ||__     _| ||   
   \__ ||  |_____||  \_____||  |_____||  /__//    
    -|_||  `-----`    `----`   `-----`   `--`     
     `-`
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  • 6. Comparing Loan Amounts

    Payday loans are short-term loans that are typically due the next time you receive a paycheck. The tables show rates at two different payday loan companies.

    Does the APR for a 30-day loan change as the amount increases? Explain.

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      ______     ___      ____       ___       _____  
 /_   _//   / _ \\   |  _ \\    / _ \\    / ___// 
 `-| |,-   / //\ \\  | |_| ||  | / \ ||   \___ \\ 
   | ||   |  ___  || | .  //   | \_/ ||   /    // 
   |_||   |_||  |_|| |_|\_\\    \___//   /____//  
   `-`'   `-`   `-`  `-` --`    `---`   `-----`
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