You are asked to lend a friend $10,000 for a year. At the end of the year your friend agrees to pay you $10,500. The interest rate on this loan is

Name: You are asked to lend a friend $10,000 for a year. At the end of the year your friend agrees to pay you $10,500. 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 in this case is ($10,500 - $10,000) / $10,000 = $500 / $10,000 = 0.05 or 5%.

You Are Asked to Lend a Friend $10,000 for a Year