Question

Based on a $500 loan amount, rank the following companies from the lowest to highest annual percentage rate (APR).

Company
Fees Charged
Term of Loan
A
$60
20 days
B
$50
12 days
C
$75
15 days
D
$100
8 days

a.
A, B, C, D
b.
B, A, C, D
c.
D, B, C, A
d.
D, C, B, A

Answer 1

Use APR ≈ (fee / principal) × (365 / days) × 100%.

For $500 principal:

- A: (60/500)×(365/20) = 0.12×18.25 = 2.19 → 219.0% APR
- B: (50/500)×(365/12) = 0.10×30.4167 = 3.0417 → 304.2% APR
- C: (75/500)×(365/15) = 0.15×24.3333 = 3.65 → 365.0% APR
- D: (100/500)×(365/8) = 0.20×45.625 = 9.125 → 912.5% APR

Order lowest to highest: A, B, C, D → choice a.