3
QuizMultiple Choice

Consumer Responsibilities

Question 3 • [PERFIN] Personal Finance, Sem 2 (26-27)

A company offering tax refund anticipation loans is trying to draw new customers. The company guarantees that the annual percentage rate on its loans is 39%. What fees would the company charge on a $1,200 loan if the term of the loan is 18 days? (Round to the nearest dollar).

Answer
A
$18
B
$23
C
$28
D
$30

Explanation

Use simple interest for the 18-day loan: interest = principal × annual rate × fraction of a year. Thus, $1,200 × 0.39 × (18 ÷ 365) ≈ $23.08, which rounds to $23. The company would charge $23 in fees, choice B.

AI-written and checked against the verified answer.

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