When interest is calculated for periods shorter than a year,the formula to calculate interest is I = P * R * T,where:
A)I = interest calculated,P = principal,R = annual interest rate,and T = number of months.
B)I = interest calculated,P = principal,R = annual interest rate,and T = (number of months / 12)
C)I = interest calculated,P = principal,R = monthly interest rate,and T = (number of months / 12).
D)none of the choices are correct.

Question

Quizplus · Accepted Answer

The correct formula for calculating interest for periods shorter than a year involves converting the time period into a fraction of a year. In choice B, T is defined as the number of months divided by 12, which correctly converts months into years, making it the accurate representation for calculating interest over periods shorter than a year.

When Interest Is Calculated for Periods Shorter Than a Year,the