You are asked to lend a friend $20,000 for a year. At the end of the year your friend agrees to pay you $21,000. The interest rate on this loan is

Name: You are asked to lend a friend $20,000 for a year. At the end of the year your friend agrees to pay you $21,000. The interest rate on this loan is
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Question

Quizplus · Accepted Answer

The interest rate is calculated as (Interest / Principal) * 100. Here, the interest is $1,000 ($21,000 - $20,000), and the principal is $20,000. So, the interest rate is ($1,000 / $20,000) * 100 = 5%.

You Are Asked to Lend a Friend $20,000 for a Year