Question

Uriel used a $350.00 payday loan to pay a bill. the finance charge on the loan was $25.00 with a $10.00 transaction fee. if the term was 14 days, what was the APR of Uriel's loan? Round the final answer to the nearest hundredth.140.56%194.67%205.56%260.71%

Answer 1

First, we have to divide the finance charge by the $350.00 bill. The finance charge is (25$ + $10 = $35). Then, we have to multiplicate this result by 365 (number of days in the year) and finally, divide the result by the number of days 14. I will do the calculations below:

$\text{APR = }\frac{\frac{35}{350}\times365}{14}=2.6071$

Now we multiplicate the result by 100 to get the percentage. This will be 260.71%