Question

If you paid $63 to a loan company for the use of $1,062 for 76 days, What annual rate of interest did they charge? (Assume a 360-day year.)

Answer 1

The annual rate of interest charged by the loan company for the use of $1,062 for 76 days, with an interest payment of $63, is approximately 10.22%.

Step-by-step explanation:

To calculate the annual rate of interest charged by the loan company, we can use the formula for simple interest: I = PRT, where I is the interest paid, P is the principal amount (initial loan amount), R is the rate of interest per year, and T is the time the money is borrowed for in years.

From the information given, we know that:

• I (Interest paid) is $63.
• P (Principal amount) is $1,062.
• T (Time) is 76 days out of a 360-day year, which is 76/360 years.

First, we rewrite the simple interest formula to solve for R (annual rate of interest): R = I / (PT). Substituting the values we have into the equation gives us R = 63 / (1062 * (76/360)). Now we need to perform the calculations to find out R.

After calculating, R is found to be approximately 0.1022, or 10.22% annual interest.