Assuming a 360-day year, when a $30,000, 90-day, 5% interest-bearing note payable matures, total payment will amount to:
A) $31,500
B) $1,500
C) $30,375
D) $375

Question

Quizplus · Accepted Answer

The interest on the note payable can be calculated as:  
Interest = Principal x Rate x Time  
where Principal is the amount of the note payable, Rate is the interest rate per year, and Time is the number of days the note is outstanding divided by the number of days in a year.  
So, Interest = $30,000 x 5% x (90/360) = $375  
The total payment on the note payable will be the sum of the principal and the interest:  
Total payment = $30,000 + $375 = $30,375

Assuming a 360-Day Year, When a $30,000, 90-Day, 5% Interest-Bearing