Smith's business receives an invoice from a supplier for 1000 with payment due within 30 days. The terms of payment allow for a discount of 2.5% if the bill is paid within 7 days.

Smith does not have the cash on hand 7 days later, but decides to borrow the 975 to take advantage of the discount.

What is the largest simple interest rate, as an annual rate, that Smith would be willing to pay on the loan?