interest and total payments\n$10,000 loan over five years\ninterest rate | monthly payment | total paid\n5%…

interest and total payments\n$10,000 loan over five years\ninterest rate | monthly payment | total paid\n5% | $188.70 | $11,322.00\n10% | $212.50 | $12,750.00\n15% | $237.90 | $14,274.00\n18% | $253.90 | $15,234.00\n\nbanks make the most money and take the most risk with an interest rate of\n5 percent.\n10 percent.\n15 percent\n18 percent.

interest and total payments\n$10,000 loan over five years\ninterest rate | monthly payment | total paid\n5% | $188.70 | $11,322.00\n10% | $212.50 | $12,750.00\n15% | $237.90 | $14,274.00\n18% | $253.90 | $15,234.00\n\nbanks make the most money and take the most risk with an interest rate of\n5 percent.\n10 percent.\n15 percent\n18 percent.

Answer

Brief Explanations:

First, calculate the total interest earned by the bank for each rate by subtracting the principal ($10,000) from the total paid amount:

  • 5%: $$11,322.00 - $10,000 = $1,322.00$
  • 10%: $$12,750.00 - $10,000 = $2,750.00$
  • 15%: $$14,274.00 - $10,000 = $4,274.00$
  • 18%: $$15,234.00 - $10,000 = $5,234.00$ The highest total interest (most money for the bank) comes from the 18% rate. Higher interest rates also correspond to higher risk, as they are typically charged to borrowers with higher default risk.

Answer:

18 percent.