Wilma borrows $10,000 from "Jaw Breaker Joe" and promises to repay Joe a total of $10,500 in one month. What is the effective annual interest rate charged by Joe? O 5.00% O 60.00% O 79.59% 179.59%

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.