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7 March, 03:47

Taylor Whitney it's a word problem A payday loan company charges a $25 fee for a $700 payday loan that will be repaid in 12 days. Treating the fee as interest paid, what is the equivalent annual interest rate.

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  1. 7 March, 05:44
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    Step-by-step explanation:

    Using I = (PRt) / 100

    Ratio of fee and principal amount = fee/amount

    = 25/700

    = 1/28

    Fee (interest) for 12 days = $25

    In 1 day,

    = (1/28) * 1/12

    = 1/336

    For a year, that is 365 days

    Fee (interest) = 365 * (1/336)

    = 1.08 * 100

    = 108 %
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