Future Business Leaders of America (FBLA) Business Calculations Practice Test

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Dive into the FBLA Business Calculations Test. Sharpen your analytical skills with multiple-choice questions and gain insights with detailed explanations. Excel in your exams!

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If you borrow $2000 for a year and pay a total of $180 in interest, what is the interest rate?

8.2%
9.2%
11.1%
9%

The correct answer is: 9%

To determine the interest rate when borrowing a certain amount and paying a specified interest, the formula to use is: Interest Rate = (Interest Paid / Principal) × 100 In this case, the principal amount is $2000, and the interest paid is $180. Plugging these values into the formula gives: Interest Rate = ($180 / $2000) × 100 Calculating this yields: Interest Rate = 0.09 × 100 = 9% This means that the interest rate on the borrowed amount is 9%. This calculation demonstrates how to derive the interest rate by assessing the direct relationship between the interest paid and the borrowed principal, allowing one to express it as a percentage of the principal amount. Understanding how to calculate interest rates is crucial in various financial contexts such as loans, credit, and investments.