Ramos Company has a 90-day note that carries an annual interest rate of 8%. If the amount of the total interest on the note is equal to $700, then what is the principal of the note?
A) $8,750
B) $35,000
C) $50,400
D) $22,400

Question

Quizplus · Accepted Answer

The formula for interest is I = PRT, where I is the interest, P is the principal, R is the rate, and T is the time in years. Here, I = $700, R = 8% or 0.08, and T = 90/365. Solving for P gives P = I / (RT) = $700 / (0.08 * 90/365) = $35,000.

Ramos Company Has a 90-Day Note That Carries an Annual