888
QuizMultiple Choice

Cumulative Exam — Cumulative exam

Question 888 • Career Explorations A

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?

Answer
A
228%
B
487%
C
913%
D
973%

Explanation

The fee is $15 on a $75 loan, so the 8-day borrowing cost is $15 ÷ $75 = 0.20, or 20%. To annualize it, multiply by 365 ÷ 8: 0.20 × 45.625 = 9.125, or about 913%. Therefore, the annual percentage rate is approximately 913%, choice C.

AI-written and checked against the verified answer.

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