Question

You borrow $200 from a friend. You repay the loan in 2 weeks and agree to pay $8 for interest. What is the annual percentage rate? Round your answer to the nearest tenth of a percent.Rate = interest/principal x time

Answer 1

If you repay in two weeks this is 1/26 of a year
$8 in two weeks = 8x26 = $208 in a year
Interest rate per year = 208/200 = 1.04 = 1.0% pa to one decimal place

Answer 2

From the given question

There are given that the principal value is $200 and time duration is 2 weeks and agree to pay $8 for interest

Now,

From the formula of annual percentage rate:

`\text{APR}=((\frac{\frac{Fes+interest}{\text{principal}}}{n})*365)*100`

Then,

`\begin{gathered} \text{APR}=((\frac{\frac{Fes+interest}{\text{principal}}}{n})*365)*100 \\ \text{APR}=((((8)/(200))/(2))*365)*100 \\ \text{APR}=(((8)/(400))*365)*100 \\ \text{APR}=(((8)/(4))*365) \\ \text{APR}=2*365 \\ \text{APR}=730 \end{gathered}`

Hence, the annual percentage rate is $730.