You are down on your luck and need a loan, quick! You locate Mr. Loa N. Shark who advertises weekly loans for “an almost imperceptibly small rate” of only 2.0%, prepaid at the time of the loan. You sign over your federal tax refund for $800 to Mr. Shark, with proof that it is correct and will be forthcoming from the IRS in one week.
a. How much money does Mr. Shark hand you?
b. How much weekly interest are you really paying?
c. What is the nominal annual interest rate?
d. What is the effective annual interest rate?