Final answer:
The annual interest rate for a $25 charge on a one-month $500 loan is 60%, calculated by multiplying the monthly rate by 12 months.
Step-by-step explanation:
To calculate the annual interest rate equivalent for the payday loan, we need to consider the interest paid and the principal amount for the period of the loan. In this case, the interest paid for the loan of $500 is $25 for a one-month period. To find the annual rate, we multiply the monthly rate by 12, because there are 12 months in a year:
Monthly interest rate = $25 / $500 = 0.05 (which is 5% per month)
Annual interest rate = Monthly interest rate × 12 = 0.05 × 12 = 0.6 or 60%
Therefore, the annual interest rate for a $25 charge on a one-month $500 loan is 60%.