If Mega Corp. borrows $8,000 and agrees to pay the lender $9,000 in one year, the annual interest rate on the loan is approximately _____%.

Question

Quizplus · Accepted Answer

To find the annual interest rate, we need to use the formula: 
Interest = Principal x Rate x Time 
where Principal is the amount borrowed, Rate is the annual interest rate, and Time is the duration of the loan in years.

In this case, we know that:
Principal = $8,000
Interest = $9,000 - $8,000 = $1,000
Time = 1 year

Substituting these values into the formula, we get: 
$1,000 = $8,000 x Rate x 1 
Rate = $1,000 / $8,000 
Rate = 0.125 or 12.5%

Therefore, the answer is choice C (12.5%).