Suppose you borrow $1,000 today with the promise to pay back $1,070 one year from today. Based upon this information, the interest rate is __________, and the interest is __________.

Question

BlackTom AI · Accepted Answer

Begin by identifying the loan details: you borrow 1000 today and repay 1070 one year from now. The interest amount is the difference between the repayment and the principal, which is 1070 − 1000 = 70. The interest rate is the interest divided by the principal, so 70/1000 = 0.07, which equals 7%.

Option 1: "$70; 7 percent" lists the interest amount first and then the rate. While both values are correct, the statement typically presents the rate before the amount of interest, so this order is misleading despite correctness of numbers.

Option 2: "7 percent; $1,070" correctly states the rate as 7 percent but incorrectly identifies the interest amount as 1,070, which is the total repayment, not the interest itself. This conflates total repayment with interest.

Option 3: "7 percent; $70" matches both the correct interest rate (7%) and the correct interest amount ($70). This aligns with the standard interpretation of interest over one year on a 1000 principal to 1070 repayment.

Option 4: "10 percent; $100" uses an incorrect rate and an incorrect interest amount, which would imply a different repayment total (1100) than the one given, so this is not consistent with the scenario.

Option 5: "$100; 10 percent" again mixes up the figures, presenting a $100 interest and a 10% rate, which would imply a total repayment of 1100, not 1070. This pair does not reflect the described loan.

Princip of Econ-Microeconomics Module 13 Homework Assignment

Suppose you borrow $1,000 today with the promise to pay back $1,070 one year from today. Based upon this information, the interest rate is , and the interest is .

查看解析

登录即可查看完整答案

类似问题

A customer of a bank has $275,000 in surplus funds that need to be invested for a short period of time. The bank offers to sell a 90-day negotiable certificate of deposit (CD) to the customer at a yield of 6.45 per cent per annum. Advise the customer of the dollar return on the CD.

A bank, in a 365-day year country, accepts a $2m deposit to mature in 270 days and will pay 2.33% p.a. on the deposit. How much interest will it pay?

Interest on a savings account is calculated at 0.3% per month based on the minimum monthly balance. The following statement lists all the transactions on an account for January–March one year. The interest, in dollars, for the month of February is:

Interest on a savings account is calculated at 0.3% per month based on the minimum monthly balance. The following statement lists all the transactions on an account for January–March one year. The interest, in dollars, for the month of February is:

Interest on a savings account is calculated at 0.3% per month based on the minimum monthly balance. The following statement lists all the transactions on an account for January–March one year. The interest, in dollars, for the month of February is:

Company A has a loan agreement under which it can borrow at a rate of 1.50% p.a. above the BKBM. Suppose the six-month BKBM rate is 2.50% p.a., and that the company borrows $10,000,000. What is the effective interest rate and the amount of interest that will be due in six months time?

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单