Lane French had a bad credit rating and went to a local cash center. He took out a $100.00 loan payable in two weeks at $105.50. What is the percent of interest paid on this loan?
I = PRT
5.50 = 100 * R * 0.0385
5.5 = 3.85R
100(5.5/38.5) = R
143% = R
100(5.5/3.85) = R
143% = R
To calculate the percent of interest paid on this loan, we need to determine the amount of interest paid and then calculate it as a percentage of the original loan amount.
First, we subtract the loan amount from the total amount to figure out the interest paid. In this case, the loan amount is $100.00 and the total amount payable is $105.50. Therefore, the interest paid is:
Interest paid = Total amount payable - Loan amount
Interest paid = $105.50 - $100.00
Interest paid = $5.50
Next, we calculate the percentage of interest paid by dividing the interest amount by the loan amount and multiplying by 100:
Interest percentage = (Interest paid / Loan amount) * 100
Interest percentage = ($5.50 / $100.00) * 100
Interest percentage = 5.5%
Therefore, the percent of interest paid on this loan is 5.5%.