In: Finance
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?
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