You lend a friend $10,000 for a year. At the end of the year your friend agrees to pay you $10,700. The interest rate on this loan is

Name: You lend a friend $10,000 for a year. At the end of the year your friend agrees to pay you $10,700. The interest rate on this loan is
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Question

Quizplus · Accepted Answer

The interest rate is calculated as the interest paid divided by the principal amount, which is ($10,700 - $10,000) / $10,000 = $700 / $10,000 = 0.07 or 7%.

You Lend a Friend $10,000 for a Year