Calculus

You are expecting a tax refund of \$4,000 in 4 weeks. A tax preparer offers you an "interest-free" loan of \$4,000 for a fee of \$50 to be repaid by your refund check when it arrives in 4 weeks. Thinking of the fee as interest, what simple interest rate would you be paying on this loan?

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1. let the rate be r

4000(r)(4/52) = 50
r = 50(52)/((4000)(4))
= .165 or 16.5%

There are actual companies dealing in paycheck-bridge loans that are charging \$10 per week for a \$200 quick "paycheck loan"
that is a rate of ...
200(r)(1/52) = 10
r = 10(52)/200 = 2.6 or 260%

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