Von Hayek's Kayaks can borrow $12,500 for 60 days at a cost of $220 interest. What is the effective rate of interest?
A) Less than 9.9 percent
B) More than 9.9 percent, but less than 10 percent
C) More than 10.5 percent, but less than 11.5 percent
D) More than 11.5 percent

Question

Quizplus · Accepted Answer

The effective rate of interest is calculated as (Interest/Principal) * (365/Days) * 100. For this problem, it is ($220/$12,500) * (365/60) * 100, which is approximately 10.56%.

Von Hayek's Kayaks Can Borrow $12,500 for 60 Days at a Cost