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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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     \_____||  |_____||  `__ `    |_||  |_||   \__ || 
      `----`   `-----`   /_//     `-`   `-`     -|_|| 
                         `-`                     `-`  
    
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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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