Donnie has the option of borrowing $680 for 1 week a ran APR of 450% or borrowing the $680 for 1 week with a fee of $60. Which is the better deal?

Question

Mathematics

Vava

19 September, 16:56

Donnie has the option of borrowing $680 for 1 week a ran APR of 450% or borrowing the $680 for 1 week with a fee of $60. Which is the better deal?

+4

Answers (1)

Know the Answer?

Helen Craig · Answer 1

Option A is best deal i. e. borrowing at an APR of 450%.

Step-by-step explanation:

Option A: borrowing 680 dollars are an APR of 450% for one week.

Principal amount, P = 680 dollars.

Rate of interest, R = 450%/52 = 450/5200 = 9/104

Time period, T = 1 week.

Interest to be paid after 1 week = P*R*T = 680 x (9/104) x 1 = 58.85 dollars.

Option B: borrowing 680 dollars for 1 week at a fee of $60.

Interest to be paid after 1 week = 60 dollars.

Hence, option A is cheaper and best deal, i. e. borrowing at APR of 450%.