The interest on a $20,000 face value, 90-day note that bears interest at 6 percent a year? (Assume 360 days in a year.)
A)$12,000
B)$3,000
C)$1,200
D)$300

Question

Quizplus · Accepted Answer

The interest on the note can be calculated using the formula: Interest = Principal × Rate × Time. Here, Principal = $20,000, Rate = 6% per year (or 0.06 when expressed as a decimal), and Time = 90 days out of 360 days in a year (or 90/360 = 0.25 years). Thus, Interest = $20,000 × 0.06 × 0.25 = $300.

The Interest on a $20,000 Face Value, 90-Day Note That