You Are Considering the Purchase of a Motorized Scooter Where

question 34

Multiple Choice

You are considering the purchase of a motorized scooter where the price of the scooter is based upon the miles per gallon (mpg) of gasoline that the scooter can achieve.That is,the current price of the scooter that you want is $1,000 because the scooter can achieve 100 miles per gallon and the cost per mpg is $10.Right before you are about to purchase the scooter,your best friend requests that you loan him $1,000 for one year.You make the loan in order to be able to buy a 105 mpg scooter at the conclusion of the loan.If you anticipate that the cost per mpg will increase to $11,what rate of interest do you charge your friend?

• A) 5%
• B) 10%
• C) 15%
• D) 15.5%