Question

If a 24-day single payment loan has a periodic interest rate of 8.4% what is the approximate APR of the loan?

A. 201.6%
B. 127.8%
C. 12.8%
D. 20.2%

Answer 1

365 days by 24 = 15.20833 periods multiplied by 8.4 % = 127.8%

Answer 2

Option B, 127.8%

Explanation:

If a 24-day single payment loan has a periodic interest rate of 8.4%.

First we divide 365 by 24 to make periods of 24 days in one year.

365 ÷ 24 = 15.21

periodic interest rate of 8.4%

then Annual Percentage Rate = 15.21 × 8.4 = 1 27.76 ≈ 127.8%

127.8% is the approximate APR of the loan.