Question

You take out a 60- day loan for $5000, at the end of the loan, you owe $73.97 in interest. What is the annual percentage rate? Round your answer to the nearest 10th of a percentRate equals interest/principle X time

Answer 1

To solve the problem we have to use the simple interest formula:

$\text{Interest = Initial Money }\times\text{ Percentage }\times\text{ Time}$

In this case, we have to put the time into the year format. Thus,

$\text{79.97= 5000 }\times\text{ Percentage }\times\text{ }\frac{60}{365}$$\text{Percentage = }\frac{79.97}{5000\times\frac{60}{365}}=0.097296$

Answer: The annual percentage rate is 9.7%