A payday lender offers to lend customers $100 for 1 week for a $10 interest charge....

Question

Question

A payday lender offers to lend customers $100 for 1 week for a $10 interest charge. What is the APR for this loan?

Multiple Choice 1000 percent 365 percent 520 percent 14,204 percent 100 percent

business finance

Answer 1

Answer #1

Lending amount = $100

Interest on lending amount = $10

No of weeks = 1

Let APR be X

Interest = Loan Amount*APR*No of Weeks/52

$10 = 100*\frac{X}{100}*\frac{1}{52}$

X = 520%

So, APR is 520%

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Answer 2

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