A payday loan company makes loans between $100 and $1000 available to customers. Every 14 days, customers are charged 30% interest with compounding. In 2013, Remi took out a $300 payday loan. Which expression can be used to calculate the amount she would owe, in dollars, after one year if she did not make payments?
Question
Answer:
The expression that can be used to calculate the amount she would owe, in dollars, after one year if she did not make payments is 300 * (1.30)^(365 / 14).
Step-by-step explanation:
Since Remi did not make payments after one year, the expression that can be used to calculate the amount she would owe, in dollars, can be obtained using the following formula:
M = P * (1 + r)^(N / n) ………………….. (1)
M = The dollar amount Remi would owe after one year if she did not make payments = ?
P = Principal or the amount borrowed = $300
r = interest rate = 30% or 0.30
N = number of days in a year = 365
n = number of days after which the interest is charged = 14
Substituting the values into equation (1), we have:
M = 300 * (1 + 0.30)^(365 / 14)
M = 300 * (1.30)^(365 / 14)
Therefore, the expression that can be used to calculate the amount she would owe, in dollars, after one year if she did not make payments is 300 * (1.30)^(365 / 14).