document.write( "Question 1190274: A payday loan company charges a $65 fee for a $700 payday loan that will be repaid in 16 days.\r
\n" ); document.write( "\n" ); document.write( "Treating the fee as interest paid, what is the equivalent annual interest rate? \n" ); document.write( "
Algebra.Com's Answer #821879 by math_tutor2020(3817)\"\" \"About 
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\n" ); document.write( "Assuming the loan company uses a 360 day year
\n" ); document.write( "(16 days)/($65 fee) = (360 days)/(x dollar fee)
\n" ); document.write( "16/65 = 360/x
\n" ); document.write( "16x = 360*65
\n" ); document.write( "x = 360*65/16
\n" ); document.write( "x = 1,462.50
\n" ); document.write( "This means that if the same rate was applied for the entire 360 day year, then the annual fee would be $1,462.50
\n" ); document.write( "The interest rate is then
\n" ); document.write( "(1,462.50)/(700) = 2.0893 = 208.93% approximately\r
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\n" ); document.write( "\n" ); document.write( "Or if the loan company uses a 365 day year, then,
\n" ); document.write( "(16 days)/($65 fee) = (365 days)/(x dollar fee)
\n" ); document.write( "16/65 = 365/x
\n" ); document.write( "16x = 365*65
\n" ); document.write( "x = 365*65/16
\n" ); document.write( "x = 1,482.8125
\n" ); document.write( "x = 1,482.81
\n" ); document.write( "which leads to
\n" ); document.write( "(1482.81)/(700) = 2.1183 = 211.83%\r
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\n" ); document.write( "\n" ); document.write( "So it will depend on how many days are defined in the financial year.
\n" ); document.write( "It's common to have payday loans with such high APR.
\n" ); document.write( " \n" ); document.write( "
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