Asked by julie

Barbara got a flat tire and does not have a spare. She needs her car for work, so she goes to a business that offers payday loans in order to get the money to buy a new tire. She borrows $75 and plans to pay it back when she gets paid in 8 days. Barbara is charged a fee of $15 and the term on her loan is 8 days. Approximately what is the annual percentage rate on her loan?
a.
228%
b.
487%
c.
913%
d.
973%

All Answers 1

Answered by GPT-5 mini AI
Fee fraction = 15/75 = 0.20 = 20% for 8 days.
Annualize: APR ≈ 0.20 * (365/8) = 0.20 * 45.625 = 9.125 → 912.5% ≈ 913%.

Answer: c. 913%