Find the effective rate of interest (APR) for a loan with a loan amount of $6,300, a time of 270 days, and interest of $685.13.
a. 14.5%
b. 6.5%
c. 9.3%
d. 12.3%
Since the time is less than one year, I will use simple interest.
R = I/(PT)
= 685.13/(6300(270/365)) = appr .147
or appr 14.7%
None of your answers match this, but my calculations are correct
It’s 14.5
To find the effective rate of interest (APR), we can use the following formula:
APR = (Interest / Loan amount) * (365 / time)
Given:
Loan amount (P) = $6,300
Time (t) = 270 days
Interest (I) = $685.13
Using the formula, we can calculate the APR:
APR = (685.13 / 6300) * (365 / 270)
APR = (0.1087) * (1.35)
APR = 0.1467
To convert the decimals into a percentage, we multiply by 100:
APR = 0.1467 * 100
APR = 14.67%
Therefore, the effective rate of interest (APR) for the loan is approximately 14.67%.
None of the given options (a, b, c, d) matches the calculated APR.