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If your receive $500 in simple interest on a loan that you made for $10,000 for 5 years, what was the interest rate you charged? Please show how you got to the answer

If your receive $500 in simple interest on a loan that you made for $10,000 for 5 years, what was the interest rate you charged? Please show how you got to the answer

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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To solve the problem of determining the interest rate, we can use the formula for simple interest: Simple Interest = Principal x Rate x Time Given: - Simple Interest = $500 - Principal = $10,000 - Time = 5 years We need to find the Rate (R). Rearranging the formula to solve for Rate gives us: Rate = Simple Interest / (Principal x Time) Substitute the given values into the equation: Rate = $500 / ($10,000 x 5) Rate = $500 / $50,000 Rate = 0.01 To express the rate as a percentage, convert it by multiplying by 100: Rate = 0.01 x 100 = 1% Therefore, the interest rate charged was 1%.
Transcribed Image Text:To solve the problem of determining the interest rate, we can use the formula for simple interest: Simple Interest = Principal x Rate x Time Given: - Simple Interest = $500 - Principal = $10,000 - Time = 5 years We need to find the Rate (R). Rearranging the formula to solve for Rate gives us: Rate = Simple Interest / (Principal x Time) Substitute the given values into the equation: Rate = $500 / ($10,000 x 5) Rate = $500 / $50,000 Rate = 0.01 To express the rate as a percentage, convert it by multiplying by 100: Rate = 0.01 x 100 = 1% Therefore, the interest rate charged was 1%.
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