document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1182569>Question 1182569</A>: <I><SPAN STYLE=\"word-break: break-all;\"> A payday loan is a short-term loan that is repaid on the next payday, often by giving the lender electronic access to a personal checking account. Some states have statutes that regulate the fees that may be charged for payday loans. Suppose that, in a certain state, finance charges on a payday loan may not exceed 17.4% of the amount advanced.\r<BR>\n" );
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document.write( "Find the annual interest rate if $600 is borrowed for 8 days at the maximum allowable charge.\r<BR>\n" );
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document.write( "Round to the nearest percent as needed.  </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #812658 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=812658\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> the loan is 600.<BR>\n" );
document.write( "the finance charge is .174 * 600 = 104.4<BR>\n" );
document.write( "that's for 8 days.<BR>\n" );
document.write( "the annual charge at that rate for every 8 days would be 365/8*104.4 = 4763.25.<BR>\n" );
document.write( "that would make the annual interest rate = 4763.25 / 600 = 7.93875 * 100 = 793.875%.\r<BR>\n" );
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document.write( "the formula for simple interest is i = p * r * t<BR>\n" );
document.write( "i is the interest<BR>\n" );
document.write( "p is the principal<BR>\n" );
document.write( "r is the interest rate per time period<BR>\n" );
document.write( "n is the number of time periods\r<BR>\n" );
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document.write( "the interest rate per time period is .174 for 8 days.<BR>\n" );
document.write( "divide that by 8 to get an interest rate of .02175 each day.<BR>\n" );
document.write( "multiply that by 365 to get an interest rate of 7.93875 each year.\r<BR>\n" );
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document.write( "the formula becomes i = 600 * 7.93875 * 1 = 4763.25<BR>\n" );
document.write( "alternately, it can become i = 600 * .02175 * 365 = 4763.25\r<BR>\n" );
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document.write( "the first one uses the annual rate with a time period of 1 year.<BR>\n" );
document.write( "the second one uses the daily rate with  time period of 365 days.<BR>\n" );
document.write( "it is assumed that one year is equal to 365 days.\r<BR>\n" );
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document.write( "the interest charge is the same.\r<BR>\n" );
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document.write( "the bottom line is that you are paying an exorbitant sum for interest on a pay day loan.\r<BR>\n" );
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document.write( "they are designed for short periods only.\r<BR>\n" );
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document.write( "the fly in the ointment is that there is no mention of how long the payday loan can be.\r<BR>\n" );
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document.write( "if it's 8 days, the maximum interest charge is 17.4%.<BR>\n" );
document.write( "if it's 16 days, the maximum interest charge is still 17.4%.<BR>\n" );
document.write( "it appears that the maximum interest charge will be 17.4% regardless of the length of the loan.<BR>\n" );
document.write( "there may also be a law that a payday loan can only be so long, i.e. 7 or 14 days or 30 days, depending on the interval of pay.<BR>\n" );
document.write( "all of these need to be taken into consideration.\r<BR>\n" );
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document.write( "based on this problem, without taking all of those things into consideration, i would bo with an equivalent annual rate of 793.875%.\r<BR>\n" );
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document.write( " </SPAN>\n" );
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