Question

You receive an email from a firm proposing the following business deal. The firm will send you $1,000 now, and in exchange you will send it $1,100 in one year. You will just break-even if the annual interest rate is _____%.

Answer 1

Answer: 10%

Step-by-step explanation:

If the annual interest rate is 10%, you will breakeven because you would have made just enough to send the firm the $1,100 that you are required to send in a year.

= 1,000 * ( 1 + 10%)

= $1,100