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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