What's the APR of a ‘pint to say thanks for the cash’? poll discussion

PigDog · 11 March 2009 at 3:22PM

Nah, you got it wrong. A IS the correct answer. The strict terms and conditions of this contract falls under the intention to create legal relations and specifically state the contract has a one week lifespan. Failure to pay before this deadline would fall outside these terms and conditions if a compound interest was to apply. At the end of the contract time limit there are no indications that another contract will be entered into.
The term APR (Annual percentage Rate) must be taken within the availible information that no other contract would be entered into in that given year.
So suck that !

FairyElephant_2 · 11 March 2009 at 4:45PM

engelsepiet wrote: »

....having a good time with friends is priceless IMHO!

Hey, that could make a good credit card commercial! <deadpan>

...maybe I could market it to someone :rotfl: ?!? Oh Darn, someone beat me to it!

Hang on - I've got another one "it's not just food....it's bl**dy expensive food!" - sorry - did I get that one wrong??????????

~Brock~ · 11 March 2009 at 5:01PM

This reminds me of a post I made about the very same thing last year.

I must admit to be pleasantly surprised by Martin (i.e. the media) talking about interest rates in an sensible and non sensationalist manner for a change.

toasted-lion · 11 March 2009 at 9:02PM

Once at school I lent someone 10p and he said he'd pay me 20p the next day. That's approx 7515336264876270000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000
% APR!

toasted-lion · 11 March 2009 at 9:06PM

Oh and PigDog, he said equivalent APR.

orange_groves99 · 12 March 2009 at 3:48AM

Surely the APR is just 0.1375*52 = 715%

The EAR is (1.1375)^52 - 1 = 81,084% (assuming weekly compounding, which is not specified in the question)

brightonman123 · 12 March 2009 at 3:45PM

surely drinks go under goodwilll, so no APR due?!

daz9643 · 12 March 2009 at 4:19PM

Of course the answer is 'none of the above'. See below,

If someone lent MARTIN £20 and said "pay me back in a week, then buy me a pint (£2.75) and we’re sorted", what’s the equivalent APR?

1. Martin would pay the money into an instant access account paying 4%.

2. He would then head down to J D Wetherspoons for a pint @ 99p.

3. He would then pay using a combination of cashback, 0% no fee credit cards while collecting loyalty points at the same time.

4. The interest he was earning would be used to pay off the £20 over the year and in 12 months time he would have made a tidy profit.

daz9643 · 12 March 2009 at 4:26PM

Waldir wrote: »

Yes, I think the compounding is more than questionable If you don't repay your friend after a week, I'm sure you'll just buy him a pint and extend the loan for another week (for another pint)
So at the end of the year you can get away for "only" 52 pints (715% APR)

I wonder if I could suggest this to Littlewoods ? They are in Liverpool so they may go for it.

adambro · 12 March 2009 at 5:07PM

Well I got G (82,000%) since it specifies that the APR is based upon compounding. It is interesting, and presumably that is the whole point of this, to note how many people didn't get the correct answer. Probably demonstrates exactly the problem with loan sharks. Many of the voters will have a reasonable understanding of finances, many who are forced to loan sharks won't unfortunately.

What's the APR of a ‘pint to say thanks for the cash’? poll discussion

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