Question

Big Dom's Pawn Shop charges an interest rate of 15.5 percent per month on loans to its customers. Like all lenders, Big Dom must report an APR to consumers. What is the APR?

Answer 1

The APR for Big Dom's Pawn Shop, which charges a 15.5% monthly interest rate, is 186% per year, calculated by multiplying the monthly rate by 12.

Step-by-step explanation:

The student is asking how to calculate the Annual Percentage Rate (APR) for a pawn shop that charges a monthly interest rate. To find the APR from a monthly interest rate, we multiply the monthly rate by 12 (the number of months in a year). In this case, Big Dom's Pawn Shop charges a 15.5% monthly interest rate. Therefore, the APR would be 15.5% multiplied by 12, which equals to 186% per year. This is extremely high compared to typical credit card borrowing rates, which range from 12% to 18% per year.