Mars Inc. recently borrowed $220,000 from its bank at a simple interest rate of 11 percent. The loan is for nine months and, according to the loan agreement, the interest should be added to the amount borrowed and the total amount to be repaid in monthly installments. The loan's annual percentage rate (APR) is:

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The simple interest for nine months is calculated as $220,000 * 11% * (9/12) = $18,150. The total amount to be repaid is $220,000 + $18,150 = $238,150. The monthly payment is $238,150 / 9 = $26,461.11. The APR is the annualized interest rate, which is (18,150 / 220,000) * (12/9) = 0.22 or 22.00%.

Mars Inc Recently Borrowed $220,000 from Its Bank at a Simple