I've seen 2 ways of solving a problem and I don't understand why one of them works. Here's the problem:
Someone else did it with these steps:
Someone borrows $200 for 14 days. They must repay $240 at the end of the loan. What is the annual interest rate?
When I used the formula I=PRT, I took the following steps:- R=I/PT
- I = $40
- P = $200
- T = 14 days
Someone else did it with these steps:
- 40/200 = .2
- .2*365 = 73
- 73/14 = 5.21
- 5.21*100 = 521%