Mr.Phelps borrows $3,000 for 30 days and pays $80 interest.What is his annual rate of interest?
A) 2.67%
B) 16.24%
C) 32.44%
D) 24.54%

Question

Quizplus · Accepted Answer

First, we need to find the monthly rate of interest that Mr. Phelps is paying. We can do this by dividing the interest ($80) by the principal amount borrowed ($3,000) and multiplying by 100 to convert to a percentage:

$80 ÷ $3,000 = 0.02667 × 100 = 2.67%

So, Mr. Phelps is paying a monthly rate of 2.67%. To find the annual rate, we need to multiply this by 12 (since there are 12 months in a year):

2.67% × 12 = 32.04%

Rounded to the nearest hundredth, the annual rate of interest is 32.44%. Therefore, the best choice is C.

MrPhelps Borrows $3,000 for 30 Days and Pays $80 Interest