AnswersSNHS NV-Civics and EconomicsUnderstanding College Savings — Unit testQuestion 3
3
QuizMultiple Choice

Understanding College Savings — Unit test

Question 3 • SNHS NV-Civics and Economics

Kaleb wants to get a payday loan in the amount of $375. He knows that the annual percentage rates (APR) for these types of loans are high, but he is hoping to find one that has an APR of 40%. If Kaleb finds a business that charges a fee of $37 for the loan, what would the term of the loan need to be in order for Kaleb to get his desired APR?

Answer
A
9 days
B
19 days
C
90 days
D
95 days

Explanation

The APR is the loan fee divided by the amount borrowed, multiplied by 365 days and divided by the loan term. Set 0.40 = ($37 ÷ $375) × (365 ÷ days), which gives a term of about 90 days. So the correct choice is 90 days.

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