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A payday loan store charges $25 for a one-month loan of $600. What annual interest rate is this equivalent to?

User Tissuebox
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1 Answer

1 vote

Answer:

50%

Explanation:

1. determine the monthly interest rate

monthly interest rate = interest / loan amount

monthly interest = 25 / 600 = 4.17%

2, multiply the monthly interest rate by 12 to determine the annual interest rate

Annual interest = 4.17 x 12 = 0.5 = 50%

User Apfelsaft
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