Question

elise took out a payday loan for $500 due in 2 weeks that charged an $80 fee. what the periodic interest rate of the loan?

Answer 1

16%

Explanation:

The periodic interest rate refers to the rate that it's charged after certain fixed period, can be yearly, monthly, daily. In this case, the periodic interest rate is due in 2 weeks.

Now, to find this interest rate, we just have to divide the fee by the loan and see what percentage represents

`(\$80)/(\$500)=0.16`

Then, we multiply by 100 to obtain the percentage

`0.16(100)= 16\%`

Therefore, the interest rate is 16%