If someone receives $24 from a pawnbroker for a watch and redeems it one month later for $30, he has:
A)paid about 150% interest at an annual rate to borrow $24 for one month.
B)paid about 25% interest at an annual rate to borrow $24 for one month.
C)borrowed money without paying interest.
D)paid about 300% interest at an annual rate to borrow $24 for one month.
E)paid about 72% interest at an annual rate to borrow $24 for one month.

Question

Quizplus · Accepted Answer

The person paid $6 interest ($30 - $24) to borrow $24 for one month. Monthly interest rate = ($6 / $24) * 100% = 25%. Annual interest rate = 25% * 12 = 300%.

If Someone Receives $24 from a Pawnbroker for a Watch