You have a tax refund of $360.80. You are able to get the tax refund immediately from your tax preparation agency for a finance charge of $34.01. What annual simple interest rate are you paying for this loan assuming the tax refund Check would be a avaliable in 20 days?
Interest = Principle x rate x time
34.01= 360.80 x rate x 20/365
Can you solve for rate?
Simplify 360.80 x 20/365 = a decimal answer
Divide 34.01 by that answer
Change to a percent..
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To determine the annual simple interest rate you are paying for the loan, we need to use the formula for simple interest:
Interest = Principal * Rate * Time
In this case, the Principal is the finance charge ($34.01), the Time is the number of days the loan is for (20), and the Interest is the difference between the tax refund ($360.80) and the Principal.
Let's calculate the Interest:
Interest = ($360.80 - $34.01) = $326.79
Next, we can plug the values into the formula to calculate the annual simple interest rate:
Rate = Interest / (Principal * Time) * 100
Rate = (326.79 / (34.01 * 20)) * 100
Rate ≈ 48.07%
Therefore, the annual simple interest rate you are paying for this loan is approximately 48.07%.