Friendly's quick loans, inc., offers you "ten for twelve or i knock on your door." this means you get $10.00 today and repay $12.00 when you get your paycheck in one week (or else). if you were brave enough to ask, what apr would friendly's say you were paying?

Friendly's would say you were paying 1042.86% APR.

Explanation:

Annual percentage rate (APR) can be described as the yearly interest rate that is paid by a borrower to a lender which is expressed in percentage term without taking compounding into consideration.

Annual Percentage Rate (APR) can be determined using the following formula:

APR = {[(Fees + Interest amount) / Principal / n] * 365} * 100 ……………… (1)

Where;

APR = ?

Fees = 0

Interest amount = Amount to repay - Amount to borrow = $12.00 - $10.00 = $2.00

Principal = Amount to borrow = $10.00

n = Number of days in the loan term = One week = 7 days

Substituting the values into equation (1), we have:

APR = {[(0 + 2) / 10 / 7] * 365} * 100

APR = 1042.86%

Therefore, friendly's would say you were paying 1042.86% APR.

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