Question

If you paid $85 to a loan company for the use of $1,031 for 76 ​days, what annual rate of interest did they​ charge? (Assume a​ 360-day year.)

Answer 1

The loan company charged an annual rate of interest of 39.31% for the use of $1,031 for 76 days.

Step-by-step explanation:

To find the annual rate of interest charged by the loan company, we can use the formula for simple interest:

Simple interest = Principal * Rate * Time

Given that the principal is $1,031 and the time is 76 days, we need to find the rate.

Since the loan company assumes a 360-day year, we can convert the time to years by dividing by 360:

Time in years = 76 days / 360 days/year

= 0.2111 years

Now we can substitute the values into the simple interest formula:

$85 = $1,031 * Rate * 0.2111

Solving for the rate:

Rate = $85 / ($1,031 * 0.2111)

= 0.3931

= 39.31%

Therefore, the loan company charged an annual rate of interest of 39.31%.