Question 7 4 pts To borrow money, you pawn your mountain bike. Based on the value of the bike, the pawnbroker loans you $552. One month later, you get the bike back by paying the pawnbroker $851. What annual interest rate did you pay? Write as a percentage.
Accepted Solution
A:
Answer:The annual rate of interest is 650 %.Step-by-step explanation:Given,The amount of loan = $ 552,Total amount paid after one month = $ 851,So, the interest for one month = $ 851 -$ 552 = $ 299,Thus, the monthly interest = [tex]\frac{\text{Interest for a month}}{\text{Total amount of loan}}\times 100[/tex][tex]=\frac{299}{552}\times 100[/tex][tex]=\frac{29900}{552}[/tex]Since, 1 year = 12 month ⇒ 1 month = 1/12 year,Hence, the annual rate of interest = [tex]\frac{29900}{552}\times 12=\frac{358800}{552}=650\%[/tex]