Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 17: Problem 7

If you receive \(\$ 500\) in simple interest on a loan that you made for \(\$ 10,000\) for five years, what was the interest rate you charged?

Short Answer

Expert verified
The interest rate you charged on the loan was \(1\%.\)

Step by step solution

01

Rearrange the simple interest formula to find R

We have Simple Interest = P * R * T. To isolate R, we'll divide both sides of the equation by (P * T): R = Simple Interest / ( P * T)
02

Substitute the given values

Now, we'll substitute the values given in the exercise: R = \(\frac{500}{(10000 * 5)}\)
03

Calculate R

We can now calculate R: R = \(\frac{500}{50000}\) R = 0.01
04

Convert R to percentage

To express the interest rate in percentage form, we'll multiply R by 100: Interest Rate = \(0.01 * 100\) Interest Rate = 1% The interest rate you charged on the loan was 1%.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Calculate the equity each of these people has in his or her home: a. Fred just bought a house for \(\$ 200,000\) by putting \(10 \%\) as a down payment and borrowing the rest from the bank. b. Freda bought a house for \(\$ 150,000\) in cash, but if she were to sell it now, it would sell for \(\$ 250,000\). c. Frank bought a house for \(\$ 100,000\). He put \(20 \%\) down and borrowed the rest from the bank. However, the value of the house has now increased to \(\$ 160,000\) and he has paid off \(\$ 20,000\) of the bank loan.

Explain how a company can fail when the safeguards that should be in place fail.

From a firm's point of view, how isla bond similar to a bank loan? How are they different?

How do the shareholders who own a company choose the actual company managers?

What does a share of stock represent?
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free