Concept explainers
The price or rental fee charged by a lender to a borrower for the use of money is known as _________. (10-1)
To fill: The blank given in the statement “The price or rental fee charged by a lender to a borrower for the use of money is known as __________.”
Answer to Problem 1CR
The price or rental fee charged by a lender to a borrower for the use of money is known as interest.
Explanation of Solution
Interest refers to the amount paid by the borrower of the funds to the lender. Interest is paid by the borrower regularly over the period of time above the principal repayment. In this, person use another person’s money in its business and pay interest on the same amount.
The formula to compute the interest is
Consider an example:
The principal amount of loan is
Compute the interest by substituting
So, the amount of interest is
Hence, the complete statement is, “The price or rental fee charged by a lender to a borrower for the use of money is known as interest.”
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Chapter 10 Solutions
Contemporary Mathematics for Business & Consumers
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