A one-year,$15,000,12% note is signed on April 1.If the note is repaid on September 1 of the same year,how much interest expense is incurred?
A) $1,800
B) $900
C) $750
D) $600

Question

Quizplus · Accepted Answer

The interest expense is calculated using the formula: Interest = Principal x Rate x Time. Here, the principal is $15,000, the annual interest rate is 12%, and the time is 5 months (from April 1 to September 1), which is 5/12 of a year. So, the interest is $15,000 x 0.12 x (5/12) = $750.

A One-Year,$15,000,12% Note Is Signed on April 1