A payday loan company charges 4 percent interest for a two-week period. What would be the annual interest rate from that company?

1 Answer
Ricardo A.
Oct 3, 2016

177%

Explanation:

The company charges their interest every 2 weeks. There are 52 weeks in a year, so: #52/2=26# interest periods. To figure out the yearly interest rate we need to multiply the 4% rate by itself 26 times, or:

#1.04^26=2.77# or #177%#

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