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Lane French had a bad credit rating and went to a local cash center. He took out a $100 loan payable in two weeks at $111.50. What is the percent of interest paid on this loan? (Do not round intermediate calculations. Round your answer to the nearest whole percent.)

User Achilles
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1 Answer

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Answer:$15 = 100 x rate x (2/52)

The 2/52 represents 2 weeks out of 52 weeks in a year

So 15/100 = rate x (2/52)

.15 = rate x (2/52)

If you divide by (2/52) on both sides, you get: 3.9 = rate

Don't be fooled by this answer, because it is not in percent form. In order to get it into percent form you need to multiply by 100. So the percent of interest paid on the loan is 390%.

In a lot of these problems you can predict around the percentage before you even do the problem. In this problem, you can tell that the percentage is going to be high because the loan has accrued $15 interest in just two weeks (15% in just two weeks!)

So if there is 15% interest in two weeks, you know it is going to be a very high annual percentage.

I am very confident that this is the answer, if you can check the answer with your online homework I would do so and send me a message to let me know. Also, if you need more clarification I am happy to message you more without a charge. Let me know!!$15 = 100 x rate x (2/52)

The 2/52 represents 2 weeks out of 52 weeks in a year

So 15/100 = rate x (2/52)

.15 = rate x (2/52)

If you divide by (2/52) on both sides, you get: 3.9 = rate

Don't be fooled by this answer, because it is not in percent form. In order to get it into percent form you need to multiply by 100. So the percent of interest paid on the loan is 390%.

In a lot of these problems you can predict around the percentage before you even do the problem. In this problem, you can tell that the percentage is going to be high because the loan has accrued $15 interest in just two weeks (15% in just two weeks!)

So if there is 15% interest in two weeks, you know it is going to be a very high annual percentage.

I am very confident that this is the answer, if you can check the answer with your online homework I would do so and send me a message to let me know. Also, if you need more clarification I am happy to message you more without a charge. Let me know!!

Explanation:

User Zlatan Omerovic
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