Asked by Jelena Kosir on Jun 11, 2024
Verified
You will agree to lend your sister's grandma's daughter $2,000 for a year, if at the end of the year she pays you $2,200. The interest rate you are charging her is
A) 1.1%.
B) 9.09%.
C) 10%.
D) 20%.
Interest Rate
The fee a lender imposes on a borrower for access to assets, denoted as a proportion of the principal sum.
- Absorb the initial concept of interest rates and the manner in which they are determined.
Verified Answer
AL
Ashley LachapelleJun 17, 2024
Final Answer :
C
Explanation :
The interest rate is calculated as the interest amount divided by the principal amount. Here, the interest amount is $200 ($2,200 - $2,000), and the principal amount is $2,000. So, the interest rate is $200 / $2,000 = 0.1 or 10%.
Learning Objectives
- Absorb the initial concept of interest rates and the manner in which they are determined.