The interest charged by the bank, at the rate of 9%, on a 3-month, discounted note payable for $100,000 is:
A) $9,000.
B) $2,250.
C) $750.
D) $1,000.

Question

Quizplus · Accepted Answer

The formula to calculate the interest charged on a discounted note payable is:

Interest = Principal x Rate x Time

Where:
Principal = $100,000 (as stated in the question)
Rate = 9% (as stated in the question)
Time = 3/12 = 0.25 (since the note is for 3 months or a quarter of a year)

Plugging these values into the formula, we get:

Interest = $100,000 x 0.09 x 0.25 = $2,250

Therefore, the interest charged on the note is $2,250. The correct answer is B.

The Interest Charged by the Bank, at the Rate of 9