A 1-year,$15,000,12 percent 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: 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). Therefore, the interest expense is $15,000 x 0.12 x (5/12) = $750.

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