Question

You borrow $1000 from a friend. You repay the loan in 1 week and agree to pay $37.13 for interest. What is the annual percentage rate? Round your answer to the nearest tenth of a percent.

Answer 1

To find the annual percentage rate (APR), we can use the formula:

APR = (interest / principal) * (365 / days)

where "interest" is the total amount of interest paid, "principal" is the amount borrowed, and "days" is the number of days in the loan period.

In this case, the interest paid is $37.13, the principal is $1000, and the loan period is 7 days.

So we can plug in these values to get:

APR = (37.13 / 1000) * (365 / 7)

APR = 0.03713 * 52.14285714

APR = 1.935%

Rounding to the nearest tenth of a percent, the annual percentage rate is 1.9%.