Questions: Question 3 of 14 Step 1 of 1 - Save Exit Certify Lesson 6.3 Borrowing Money Suppose you wish to borrow 600 for four weeks and the amount of interest you must pay is 20 per 100 borrowed. What is the APR at which you are borrowing? Answer: (How to enter your answer (opens in new window)) % Keyword Shortcuts

Question 3 of 14 Step 1 of 1

- Save Exit Certify Lesson 6.3 Borrowing Money

Suppose you wish to borrow 600 for four weeks and the amount of interest you must pay is 20 per 100 borrowed. What is the APR at which you are borrowing?

Answer: (How to enter your answer (opens in new window))

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Transcript text: Question 3 of 14 Step 1 of 1 - Save & Exit Certify Lesson 6.3 Borrowing Money Suppose you wish to borrow $600 for four weeks and the amount of interest you must pay is $20 per $100 borrowed. What is the APR at which you are borrowing? Answer: (How to enter your answer (opens in new window)) % Keyword Shortcuts

Solution

Solution Steps

To find the Annual Percentage Rate (APR), we first need to calculate the total interest paid over the borrowing period. Then, we convert this interest rate to an annual rate. Since the interest is $20 per $100 borrowed, we can calculate the interest for $600. Next, we determine the weekly interest rate and then convert it to an annual rate by multiplying by the number of weeks in a year.

Step 1: Calculate Total Interest

The total interest for borrowing $600 is calculated based on the given rate of $20 per $100 borrowed. Therefore, the total interest is: \[ \text{Total Interest} = \left(\frac{600}{100}\right) \times 20 = 120 \]

Step 2: Determine Weekly Interest Rate

The weekly interest rate is the total interest divided by the principal amount: \[ \text{Weekly Interest Rate} = \frac{120}{600} = 0.2 \]

Step 3: Convert Weekly Interest Rate to Annual Percentage Rate (APR)

To find the APR, we convert the weekly interest rate to an annual rate by multiplying by the number of weeks in a year (52 weeks): \[ \text{APR} = 0.2 \times 52 = 10.4 \]