We have a loan of 65 days.
The principal is $1250 and the interest is $7.75.
We have to find the annual simple interest rate.
We can express the interest of a loan of this type as:
[tex]I=r\cdot\frac{t}{360}\cdot P[/tex]where r = annual interest rate, t = period of the loan in days, I = interest and P = principal.
Then, we can rearrange the equation and replace with the values:
[tex]\begin{gathered} I=r\cdot\frac{t}{360}\cdot P \\ r=\frac{I\cdot360}{t\cdot P} \\ r=\frac{7.75\cdot360}{65\cdot1250} \\ r=\frac{2790}{81250} \\ r\approx0.03433846 \\ r\approx3.4\% \end{gathered}[/tex]Answer: the annual simple interest rate is 3.4%.
