A payday lender charges $16.50 for each $100 borrowed. Suppose someone borrows $500 for 18 days. What is the annual simple interest rate (in percent) for the borrowers? (Use 360 days in 1 year.)

Answer 1

To calculate the interest paid for borrowing $500 for 18 days at a rate of $16.50 for each $100 borrowed, we first need to determine how many times $16.50 occurs in $500.

$500 / $100 = 5

Therefore, the total interest paid for borrowing $500 would be:

$16.50 x 5 = $82.50

Next, we can calculate the daily interest rate:

$82.50 / 18 = $4.5833

To find the annual interest rate, we multiply the daily interest rate by the number of days in a year:

$4.5833 x 360 = $1650

Finally, we convert this amount to a percentage:

$1650 / $500 = 330%

Therefore, the annual simple interest rate for the borrowers is 330%.