Question

If you were to take a typical payday loan for $150, with an interest rate of 24.5% due in full after two weeks, what is the total amount you would have to repay?

Answer 1

$186.75

Explanation:

In order to solve this, we first need to convert the percentage into a decimal which can be done by dividing it by 100 like so

24.5 % 100 = 0.245

Now that we have the decimal form of the percentage we add a 1 to it and multiply that by $150 in order to get the total amount that is owed after two weeks .... without the 1 added it would only give us the amount of interest that needs to be paid.

$150 * 1.245 = $186.75

Therefore after two weeks you would need to pay a total of $186.75