Question

If I loan a friend 8000 and my friend pays me back in one year plus 10% interest what’s my return on equity how do I work the math

Answer 1

Amount of loan	Return @10% per annum	Net amount receivable at the end of one year
$ 8,000.00	$ 800.00	$ 8,800.00

Your return on equity is 10% and you will get a return of $800

Return on Equity =$800         or 10%

Return on equity will be calculated as follows

Amount of loan x Rate of interest = return

Return =$8000 x 10%

Return =$800

Final amount received will be $800 interest on investment + loan amount

Final amount received=$8000+$800=$8800

So technically a loan is not return on equity but only a return on investment. For the sake of question im calling above 8000 as equity and return on equity will be $800.