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

```
• 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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```__    __   _    _     _____    __   __    ____
\ \\ / // | || | ||  |__  //   \ \\/ //  |  _ \\
\ \/ //  | || | ||    / //     \ ` //   | |_| ||
\  //   | \\_/ ||   / //__     | ||    | .  //
\//     \____//   /_____||    |_||    |_|\_\\
`       `---`    `-----`     `-`'    `-` --`

```
• 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.

These comments are not screened before publication. Constructive debate about the information on this page is welcome, but personal attacks are not. Please do not post comments that are commercial in nature or that violate copyright. Comments that we regard as obscene, defamatory, or intended to incite violence will be removed. If you find a comment offensive, you may flag it.

```             ___     __   __    ______   __   _
____      / _ \\   \ \\/ //  /_   _// | || | ||
|    \\   / //\ \\   \   //    -| ||-  | '--' ||
| [] ||  |  ___  ||  / . \\    _| ||_  | .--. ||
|  __//  |_||  |_|| /_//\_\\  /_____// |_|| |_||
|_|`-`   `-`   `-`  `-`  --`  `-----`  `-`  `-`
`-`
```
• 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%.

These comments are not screened before publication. Constructive debate about the information on this page is welcome, but personal attacks are not. Please do not post comments that are commercial in nature or that violate copyright. Comments that we regard as obscene, defamatory, or intended to incite violence will be removed. If you find a comment offensive, you may flag it.

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