Lenny Loanshark charges “1.06 points” per week (that is, 1.06% per week) on his

Question

Lenny Loanshark charges “1.06 points” per week (that is, 1.06% per week) on his loans. What APR must he report to consumers? Assume exactly 52 weeks in a year. What is the effective annual rate? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

Lenny Loanshark charges “1.06 points” per week (that is, 1.06% per week) on his loans. What APR must he report to consumers? Assume exactly 52 weeks in a year. What is the effective annual rate? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

Explanation / Answer

APR=weekly rate*52 weeks=1.06%*52=55.12%

EAR=(1+weekly rate)^52 weeks-1=(1+1.06%)^52-1=73.0307%

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