Fred ran short on cash and borrowed $300 through a Payday Loan company.The company charged him a fee of $60 to borrow the $300 for 14 days.Using the simple interest method calculate what interest rate was Fred charged for the aforementioned loan.

Question

Quizplus · Accepted Answer

The interest rate for the loan can be calculated using the formula for simple interest: $ \text{Interest Rate} = \frac{\text{Interest}}{\text{Principal}} \times \frac{365}{\text{Loan Period}} \times 100 $. Here, the interest is $60, the principal is $300, and the loan period is 14 days. Plugging these values in gives $ \text{Interest Rate} = \frac{60}{300} \times \frac{365}{14} \times 100 = 0.2 \times 26.0714 \times 100 = 521.29\% $.

Fred Ran Short on Cash and Borrowed $300 Through a Payday