Given a 360-day year, the interest expense on a $2,000, 6%, 90-day promissory note payable is: (Do not round any intermediate calculations.)
A) $30.
B) $120.
C) $90.
D) some other amount.

Question

Quizplus · Accepted Answer

The interest expense can be calculated using the formula: Interest = Principal x Rate x Time. Here, Principal = $2,000, Rate = 6% (or 0.06 as a decimal), and Time = 90/360 (since the interest rate is annual and the time is given in days for a 360-day year). Thus, Interest = $2,000 x 0.06 x (90/360) = $30.

Given a 360-Day Year, the Interest Expense on a $2,000