You are asked to lend a friend $20,000 for a year. At the end of the year your friend agrees to pay you $21,000. The interest rate on this loan is

A) 4.50%
B) 5.00%.
C) 5.50%.
D) indeterminate from this information.

Question

Moudgill Rohit · Accepted Answer

Final Answer : B, Explanation :  The interest rate is calculated as (Interest / Principal) * 100. Here, the interest is $1,000 ($21,000 - $20,000), and the principal is $20,000. So, the interest rate is ($1,000 / $20,000) * 100 = 5%.

You are asked to lend a friend $20,000 for a year. At the end of the year your friend agrees to pay you $21,000. The interest rate on this loan is

A) 4.50%
B) 5.00%.
C) 5.50%.
D) indeterminate from this information.

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Learning Objectives

Related questions

You are asked to lend a friend $20,000 for a year. At the end of the year your friend agrees to pay you $21,000. The interest rate on this loan isA) 4.50%B) 5.00%.C) 5.50%.D) indeterminate from this information.

Definitions

Learning Objectives

Learning Objectives

Related questions

You are asked to lend a friend $20,000 for a year. At the end of the year your friend agrees to pay you $21,000. The interest rate on this loan is

A) 4.50%
B) 5.00%.
C) 5.50%.
D) indeterminate from this information.