Wilma borrows $10,000 from “Jaw Breaker Joe” and promises to repay Joe a total of $10,500...

Wilma borrows $10,000 from “Jaw Breaker Joe” and promises to repay Joe a total of $10,500 in one month. What is the effective annual interest rate charged by Joe?

A. 5.00%

B. 60.00%

C. 79.59%

D. 179.59%

Expert Solution

Ans is C.79.59%

Calculations-

Note -

No. of compounding periods are 12 as there are 12 months in a year.

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