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

Question

Quizplus · Accepted Answer

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%.

You Will Agree to Lend Your Sister's Grandma's Daughter $2,000