Barbara got a flat tire and does not have a spare. She needs her car for work, so she goes to a business that offers payday loans in order to get the money to buy a new tire. She borrows $75 and plans to pay it back when she gets paid in 8 days. Barbara is charged a fee of $15 and the term on her loan is 8 days. Approximately what is the annual percentage rate on her loan?
Answers
The annual percentage rate on the loan amount of $ 75 for 8 days that Barbara took was approximately 913%.
Step-by-step explanation:
Barbara borrowed a sum of money, P = $ 75
She was charged a fee of $ 15
i.e., Barabara will pay a final amount, A = $ 75 + $ 15 = $ 90
Time period, T = 8 days = [8/365] year ….. [since we have to calculate the annual rate on her loan]
Let the annual rate on her loan be denoted as “R”%.
Required Formula:
- S.I. = A – P = PRT/100
Therefore, by substituting the given values in the above formula, we get
90 – 75 = [75*R*(8/365)] / 100
⇒ 15 * 365 * 100 = 600 * R
⇒ R = [15 * 365] / 6
⇒ R = 5475/6
⇒ R = 912.5% ≈ 913%
Thus, the annual rate of per cent on Barabara’s loan is approximately 913%.
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Answer:
C
Step-by-step explanation: