A radio commercial for a loan company states: “You only pay $0.29 a day for
each $500 borrowed.” If you borrow $1,500 for 120 days, what amount will you
repay, and what annual interest rate is the company actually charging?

Question

A radio commercial for a loan company states: “You only pay $0.29 a day for
each $500 borrowed.” If you borrow $1,500 for 120 days, what amount will you
repay, and what annual interest rate is the company actually charging?

cruffo · Answer

First - If they charge $0.29 a day for $500, how much will they charge per day for $1500?

anonymous · Answer

0.87?

cruffo · Answer

Correct: 3*500 = 1500 so 3*0.29 = 0.87.

Next - If you get charged $0.87 per day, what is the total charge for 120 days?

anonymous · Answer

104.4

cruffo · Answer

Awsome!  0.87 * 120 = 104.4

cruffo · Answer

So the amount you repay is equal to the amount you borrowed plus the additional fee:
1500 + 104.40 = ??

cruffo · Answer

yep!

anonymous · Answer

wow LOL thanks so muvh my brain really isnt working tonight hahah

cruffo · Answer

word problems :(

anonymous · Answer

lol real talk

cruffo · Answer

The last part, I'm not to sure about: "and what annual interest rate is the company actually charging?"

anonymous · Answer

ya same. i was thinking a=p(1+rt)    1604.4=1500(1+r*(120/365)

cruffo · Answer

Hum.  then solve for r?  
I was thinking:  0.29 = x% of 500.  Then solving for x, looks like you pay 0.058% per day.  Multiply by 365, to get  21.17%

anonymous · Answer

it comes out to the exact same answer:)

cruffo · Answer

Yah!  cool.

anonymous · Answer

omg thanks you've been a big help! have a good night:)

cruffo · Answer

thanks, you too!