Asked by Emmanuella Edoka on Apr 28, 2024
Verified
You agree to lend ________ to a friend for a year at an annual interest rate of 10%. At the end of the year your friend pays you $600 in interest.
A) $60
B) $660
C) $6,000
D) $6,600
Annual Interest Rate
The percentage increase in money that borrowers pay lenders over a year, typically applied to loans and savings.
Interest
The charge for borrowing money or the return for lending money, expressed as a percentage of the loan amount.
- Work out simple interest rates and recognize their significance on lending and investment outcomes.
Verified Answer
CB
Clayton BergerMay 03, 2024
Final Answer :
C
Explanation :
To find the principal amount lent to the friend, you can use the formula for simple interest: Interest = Principal × Rate × Time. Given the interest is $600, the rate is 10% (or 0.10 as a decimal), and the time is 1 year, you can rearrange the formula to solve for the principal: Principal = Interest / (Rate × Time). Plugging in the numbers: Principal = $600 / (0.10 × 1) = $6,000.
Learning Objectives
- Work out simple interest rates and recognize their significance on lending and investment outcomes.