Question

Question 2 of 10Mackenzie took out a payday loan for $1100 that charged a $95 fee. If theloan matures in 2 weeks, what is the approximate effective interest rate of theloan?A. 86%B. 762%C. 862%D. 76%

Answer 1

Given:

$\text{Loan = \ 1100}$

Fees =$ 95.

$\text{Interest =}\frac{95}{1100}\times100$

$\text{Interest =}8.63\text{ \%}$

The interest rate is 8.6 %.