Your Friend Harry Has Quit His $20,000-A-Year Job to Start

Essay

Your friend Harry has quit his $20,000-a-year job to start a business that rents fishing boats. He asks you to lend him $50,000 and agrees to pay you a 10% return on your $50,000 if he earns a profit. During the first year Harry's total revenue is $120,000 and his total cost for equipment and supplies are $100,000. Harry tells you that he cannot pay you any interest this year because he did not earn a profit. Is your friend Harry trying to cheat you?