a payday loan company charges a $80 fee for a $350 payday loan that will be repaid in 18 days. treating the…

a payday loan company charges a $80 fee for a $350 payday loan that will be repaid in 18 days. treating the fee as exact interest paid, what is the equivalent annual interest rate? % interest round to the nearest percent.

a payday loan company charges a $80 fee for a $350 payday loan that will be repaid in 18 days. treating the fee as exact interest paid, what is the equivalent annual interest rate? % interest round to the nearest percent.

Answer

Explanation:

Step1: Calculate the daily interest rate

The formula for simple interest is (I = Prt), where (I) is the interest, (P) is the principal amount, (r) is the interest rate, and (t) is the time. We know (I=$80), (P = $350), and (t = 18) days. Rearranging the formula for (r) (daily rate), we get (r=\frac{I}{Pt}). [r=\frac{80}{350\times18}] [r=\frac{80}{6300}\approx0.0127]

Step2: Calculate the annual interest rate

Since there are 365 days in a year, to find the annual interest rate (R), we multiply the daily rate (r) by 365. [R=r\times365] [R = 0.0127\times365] [R\approx46.355]

Answer:

(46%)