Question

Harpreet took out a payday loan of $500.00. He had to repay $540.00 within 7 days.

A) What was the daily interest on the loan

B) What was the annual interest?

Answer 1

a) 1,14%

b) 317%

Explanation

J = C . i . t

540 - 500 = 500 . i . 7

40 = 500 . 7 . i

i = 0,0114 = 1,14% within day

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J = 500 . 0,0114 . 365 = 2085,71

2085,71 - 500 = 500 . i . 1

1585,71 = 500 . i

i = 3,17 = 317% annual