Question

A payday loan company offers a one month loan of $250 for a fee of $10. Find the equivalent simple annual interest rate. The simple annual interest rate is __% Round your answer to two decimal places.

Answer 1

Step-by-step explanation

Given that the loan is of $250 and the fee of $10, we can apply the simple interest rate formula in order to get the appropiate value as shown as follows:

Dividing 10 by 250 give us 10/250 = 0.04 or 4%

In conclusion, 10 represents a monthly 4% or multiplying by twelve months It give us a 48% annualy.

In conclusion, the simple annual interest rate is 48%