Vito Corleone will loan you money on a "five-for-six" arrangement; i.e., for every $5 he gives you today, you give him $6 one week from now. What is the APR of this loan?

Question

Quizplus · Accepted Answer

The loan increases by 20% in one week (from $5 to $6). To find the APR, calculate the weekly interest rate (20%) and compound it over 52 weeks: (1 + 0.20)^52 - 1 = 1,040%.

Vito Corleone Will Loan You Money on a "Five-For-Six" Arrangement;