L & M loaned Joan $400 so that she could buy her textbooks for the current semester.L & M's terms for repayment of the loan are,$200 in two months,$200 in four months,and another $100 at the end of the fifth month.The legal rate of interest on this type of loan is six percent per annum.L & M's loan is usurious.

Question

Quizplus · Accepted Answer

A loan is considered usurious if the interest rate charged is higher than the legal rate of interest. In this case, L & M did not disclose the interest rate explicitly, but based on the terms of repayment, it can be calculated to be higher than the legal rate of interest. Therefore, the loan is usurious.

L & M Loaned Joan $400 So That She Could