An interest rate is a percentage that you are charged for borrowing money, expressed as a percentage of the total amount of the loan or the principal.
Formula to calculate interest rate.
Time refers to the time taken to pay off the loan.
Interest Rate (R) is usually in decimal form, to get the percentage, we have to multiply it by 100.
Example:
When paying off a loan of $1,000 after a period of one year, an individual was asked to pay $100 as interest. Calculate the interest rate of the lending institution.
Therefore, the interest rate of the lending institution is 10 %.
