Finance for math

Question

A payday loan company charges a $60 fee for a $500 payment loan that will be repaid in 15 days. Treating the fee as interest paid, what is the equivalent annual interest rate round to the nearest percent this will be over 100%

Answer 1

What they are saying here is that The Total Interest is 60 Dollars on a bank account that has 500 Dollars in it. They say a payday company and a loan. The loan is an analogy for a bank account, The fee is the interest.  The wording is confusing, but simply convert

 Payday loan = Money deposited in account    

Interest you would pay out = Interest you would receive from Money deposited

      Solve problem as Money in bank with interest, then solve

500$ deposit    60$ interest       

  to calculate interest  add ((500+60)/500)-1    = (deposited money+interest)/deposit

=   (560/500)-1  = 0.12 expressed as decimal ( asked for rate, not percent)

The interest rate is 0.12 for a period of 15 days

365 days in year

365/15 = 24.3333 interest payment periods in a year  so

24.3333*0.12 = 2.92

The rate would be 2.92