You Need to Borrow $2,000 Quickly, and the Local Pawn

question 122

Multiple Choice

You need to borrow $2,000 quickly, and the local pawn shop will give it to you if you promise to repay them $200.92 monthly over the next year.

From the pawn shop's viewpoint, what is the IRR of this transaction?

• A) 1.0% per month
• B) 1.7% per month
• C) 2.0% per month
• D) 2.5% per month
• E) 3.0% per month

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Definitions:

William Jennings Bryan

A prominent American lawyer and politician who was a major advocate for populism, serving in the U.S. Congress and running for President as the Democratic Party nominee in 1896, 1900, and 1908.

Gold Standard

A monetary system in which the value of a country's currency is directly linked to a specified amount of gold.

Retina

The light-sensitive layer of tissue at the back of the inner eye, which transmits visual signals to the brain via the optic nerve.

Cornea

The transparent front part of the eye that covers the iris, pupil, and anterior chamber, contributing most of the eye's focusing power.