In the summer of 2002, I noticed the following sign in Las Vegas:
Borrow up to $500 cash. If you borrow $100.00 you pay only $1.07 interest per day! |
What is the annual interest rate that these lenders were charging? (assume 365 days in a year).
Solution to Problem:
The answer is 390.55%.
Charging $1.07 for 365 days yields $390.55 in interest for
the $100 you borrowed. This means you are paying 390.55% interest
per year. That is nearly 4 times the amount borrowed! And they had
the nerve to use the word only in their ad!
Correctly solved by:
| 1. Walt Arrison | Philadelphia, Pennsylvania |
| 2. Rick Jones | Kennett Square, Pennsylvania |
| 3. John Funk | Ventura, California |
| 4. Bill Funk | San Antonio, Texas |
| 5. James Alarie | University of Michigan -- Flint Flint, Michigan |
| 6. John Pleacher | Leitchfield, Kentucky |
| 7. Daniel Wilberger | Winchester, Virginia |
| 8. Jeffrey Gaither | Winchester, Virginia |
| 9. Matt Stillwagon | Winchester, Virginia |
| 10. David and Judy Dixon | Bennettsville, South Carolina |
| 11. Ashley Neumann | Winchester, Virginia |