To determine the amount to be repaid, we need to calculate the total number of cents borrowed and multiply it by 28. The total number of $500 increments borrowed would be 2910 / 500 = 5.82 increments. To round this up to the nearest whole number, we can assume 6 increments were borrowed.
Thus, the total number of cents borrowed would be 6 increments * $500/increment * 100 cents/dollar = 30000 cents.
Multiplying this by the cost per day, we get the amount to be repaid: 30000 cents * $0.28/cent = $8400.
To calculate the annual interest rate, we can use the formula for simple interest:
Interest = Principal * Rate * Time
Rearranging the formula, we have:
Rate = Interest / (Principal * Time)
We can plug in the values: Principal = $2910, Interest = $8400 - $2910 = $5490, and Time = 151 days / 360 days/year.
Rate = $5490 / ($2910 * (151/360)) = 0.47 or 47%.
Therefore, the loan company is actually charging an annual interest rate of 47%.
A radio commercial for a loan company states: "You only pay 28 cents a day for each $500 borrowed." If you borrow 2910$ for 151 days, what amount will you repay?
what annual interest rate is the company actually charging? (Assume a 360-day year.)
1 answer
1 answer