Question

If you paid $28 to a loan company for the use of $1,301 for 92 days, what annual rate of interest did they charge? (Assume a 360-day year.)

Answer 1

To find the annual interest rate for a loan of $1,301 where $28 was paid as interest over 92 days, use the simple interest formula I = PRT to solve for R. Divide the interest paid by the product of the principal amount and the time period in years. Convert R into a percentage to get the annual interest rate.

Step-by-step explanation:

To find the annual rate of interest charged by the loan company for the use of $1,301 for 92 days when $28 was paid for the interest, we can use the simple interest formula.

The simple interest formula is I = PRT, where I is the interest paid, P is the principal amount (the initial amount of the loan), R is the annual interest rate (as a decimal), and T is the time the money is borrowed for, in years.

In this case, I = $28, P = $1,301, and T = 92/360 years (since we assume a 360-day year). Plugging the known values into the formula, we get $28 = $1,301 × R × (92/360).

By solving for R, the annual interest rate, we have:

R = $28 / ($1,301 × (92/360))

Now calculate the value of R and convert it into a percentage by multiplying by 100.