Answer
The annual interest rate is 650%
Work Step by Step
This is the formula we use when we make calculations with simple interest:
$A = P~(1+rt)$
$A$ is the future value
$P$ is the present value
$r$ is the interest rate
$t$ is the number of years
We can find the annual interest rate $r$.
$A = P~(1+rt)$
$rt = \frac{A}{P}-1$
$r = \frac{\frac{A}{P}-1}{t}$
$r = \frac{\frac{\$851}{\$552}-1}{\frac{1}{12}}$
$r = 6.5 = 650\%$
The annual interest rate is 650%
