Question

A loan company charges $80 interest for a three-month loan of $550. Find the annual interest rate (APR) they are charging.

Answer 1

Explanation:

using the simple interst formula;

SI = Principal * Rtae * Time/100

Given

Principal = $550

SI = $80

Time = 3 month = 3/12 years

Required

Annual interest rate

Substitute

80 = 550 * R * 3/12*100

80 = 1650R/1200

96000 = 1650R

R = 1650/96000

R = 0.017

Rate = 0.017 * 100 = 1.7%