Ramos Company has a 90-day note that carries an annual interest rate of 8%.If the amount of the total interest on the note is equal to $900, then what is the principal of the note?
A)$11,250
B)$45,000
C)$64,800
D)$28,800

Question

Quizplus · Accepted Answer

To find the principal, use the formula for simple interest: Interest = Principal x Rate x Time. Here, the interest is $900, the rate is 8% annually (0.08), and the time is 90 days (or 90/365 of a year). Rearranging the formula to solve for Principal gives: Principal = Interest / (Rate x Time). Plugging in the values: Principal = $900 / (0.08 x 90/365) = $45,000.

Ramos Company Has a 90-Day Note That Carries an Annual