The Wonder of Wonga

If you want to show students an example of how even the worst of economic downturns can still present an opportunity for some businesses then you could do worse than show them this article from the BBC about the net profit figures from pay-day loan specialists Wonga.com. The article reports that Wonga have seen a trebling of their profits during 2011 as customers feel the pinch of the recession and look for a quick way to raise cash.The article strays a little into negative reporting but it reminded me of a lesson I observed last year where the interest rate charged by Wonga was used as an example for students who were calculating compound interest using spreadsheets (you're not a true teacher of business studies until you've attempted to deliver a lesson on compound interest!). Given the APR levels set by the company, students were calculating that a £100 loan that was not paid back for 4 years would accrue a debt of £315 million!