Question

a company offering tax refund anticipation loans is trying to draw new customers. the company guarantees that the annual percentage rate on its loans is 39%. what fees would the company charge on a $1,200 loan if the term of the loan is 18 days? (round to the nearest dollar). a. $18 b. $23 c. $28 d. $30

Answer 1

first, we would need to know how much would it pay on 1 day

39/360 = 0.10833%
0.10833% of 1200 = 1.3 $/day
1.3 multiply by 18 days = 1.3*18 = 23.4 $
this finish on:
23$

Answer 2

The correct option is b.

Explanation:

It is given that company guarantees that the annual percentage rate on its loans is 39%.

We have to find the fees would the company charge on a $1,200 loan if the term of the loan is 18 days.

The annual fees charged by the company on a $1,200 loan is

`1200* (39)/(100)=468`

We know that

`1\text{ year}= 365\text{ days}`

`(1)/(365)\text{ year}= 1\text{ days}`

`(18)/(365)\text{ year}= 18\text{ days}`

The fees charged by the company on $1,200 loan for 18 days is

`468*(18)/(365)=23.08\approx 23`

Therefore option b is correct.