Answer
The annual interest rate the company is charging is 18.5%.
Work Step by Step
To find a formula for the annual interest rate, we start from the interest formula.
The interest formula is: I = P $\times$ r $\times$ t.
To find the annual interest rate, or r, we divide i by P $\times$ t
So, r = $\frac{I}{P\ \times\ t}$
t = 1 month = $\frac{1}{12}$ (Because one month is $\frac{1}{12}$ of a year.)
P = 4200
I = 64.75
Substitute these values in the formula to obtain:
r = $\frac{64.75}{4200\ \times\ \frac{1}{12}}$
r = $\frac{64.75}{350}$
r = 0.185 = 18.5%
The annual interest rate the company is charging is 18.5%.
