Asked by Jeancarlos Chavarro on Jun 13, 2024
Verified
You are asked to lend a friend $10,000 for a year. At the end of the year your friend agrees to pay you $10,500. The interest rate on this loan is
A) 0.05%.
B) 5.0%
C) 105%.
D) indeterminate from this information.
Interest Rate
The percentage charged by lenders to borrowers for the use of money, typically expressed at an annual rate.
- Familiarize with the rudimentary understanding of interest rates and their computational methods.
Verified Answer
UT
Under TrainingJun 15, 2024
Final Answer :
B
Explanation :
The interest rate is calculated as the interest paid divided by the principal amount, which in this case is ($10,500 - $10,000) / $10,000 = $500 / $10,000 = 0.05 or 5%.
Learning Objectives
- Familiarize with the rudimentary understanding of interest rates and their computational methods.