Question

candis took out a payday loan with an effective interest rate of 15,400%. if she had $220 to invest for a year at this interest rate, how much would she make in interest?

$3388
$33,880
$3,388,000
$338,800

Answer 1

To calculate the amount of interest Candis would make from an investment of $220 at an interest rate of 15,400%, you can use the formula for simple interest:

\[
\text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time}
\]

Where:
- Principal = $220
- Rate = 15,400% = 15400/100 = 154
- Time = 1 year

Now plug in the values:

\[
\text{Interest} = 220 \times 154 \times 1
\]

Calculating that:

\[
\text{Interest} = 220 \times 154 = 33,880
\]

Thus, if she invested $220 at an effective interest rate of 15,400% for one year, she would make **$33,880** in interest.

So the correct answer is **$33,880**.