Question

Myrtle needs to borrow $200 and is hoping to get a payday loan with an annual percentage rate (apr) of less than 50%. if a company charges her $30 in fees for the loan, what is the minimum loan term needed that would give myrtle her desired apr?

a. 90 days
b. 100 days
c. 110 days
d. 120 days

Answer 1

Answer: c. 110 days

Step by Step

Step-by-step explanation:

The formula to calculate the APR of a payday loan is:

APR = (fees ÷ loan amount) × (365 ÷ term of the loan) × 100

We know:

APR = 50%

fees = 30$

loan amount = 200$

term of the loan = x

Substituting the values:

50 = (30 ÷ 200) × (365 ÷ x) × 100

50 = 5475 ÷ x cross multiply

50·x = 5475 divide by 50

(50 ÷ 50)·x = 5475 ÷ 50

x = 109.5

Since we cannot have half of a day, the term of the loan will be 110 days.

Answer 2

Answer: c. 110 days

Step-by-step explanation:

The formula to calculate the APR of a payday loan is:

APR = (fees ÷ loan amount) × (365 ÷ term of the loan) × 100

We know:

APR = 50%

fees = 30$

loan amount = 200$

term of the loan = x

Substituting the values:

50 = (30 ÷ 200) × (365 ÷ x) × 100

50 = 5475 ÷ x cross multiply

50·x = 5475 divide by 50

(50 ÷ 50)·x = 5475 ÷ 50

x = 109.5

Since we cannot have half of a day, the term of the loan will be 110 days.