Question

Uriel used a $245.00 payday loan to pay a bill. The finance charge on the loan was $21.00 with a $16.00 transaction fee. If the term was 14 days, what was the APR of Uriel's loan? Round the final answer to nearest hundredth. (4 points) 340.56% 393.73% 405.56% 425.46%

Answer 1

Answer: 393.73%.

Explanation:

To calculate the APR, we need to consider the finance charge and transaction fee over the loan term. The total cost of the loan is $21.00 (finance charge) + $16.00 (transaction fee) = $37.00.

Now, let's calculate the APR using the formula: APR = (Total cost / Loan amount) * (365 / Loan term in days) * 100.

APR = ($37.00 / $245.00) * (365 / 14) * 100 ≈ 393.73%

Therefore, the APR of Uriel's loan is approximately 393.73%.