Question

What is the APR of a payday loan for $730 due in 15 days that charges a $75 fee?

A. 25%

B. 250%

C. 2500%

D. 2.5%

Answer 1

B

Explanation:

Answer 2

Option B 250% is the answer.

Explanation:

Amount of pay day loan = $730

Also given is that the payday loan for $730 due in 15 days that charges a $75 fee.

The working is as follows:

Charges per day =
`(75)/(15)=5`

Charges per year =
`365*5=1825`

Hence, for the due amount of $730, it will be charged on a rate of APR =

`(1825)/(730)*100` = 250%