Martha's paycheck of $1,371 will arrive in 6 days, but she needs money today. If a...

Martha's paycheck of $1,371 will arrive in 6 days, but she needs money today. If a payday lender is offering an annual simple discount rate of 118%, how much can she afford to borrow today?

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Expert Solution

Amount = Principal + (Principal * Rate * Time)

$1,371 = Principal + (Principal * 1.18 * 6/365)

$1,371 = Principal + 0.019397Principal

$1,371 = 1.019397Principal

Principal = $1,371 / 1.019397

Principal = $1,344.91

jeff jeffy answered 2 years ago

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