The interest on a $40,000 face value, 120-day note that bears interest at 8 percent (Rounded to the nearest dollar. Assume 360 days in a year.)is
A)$3,200.
B)$1,067.
C)$900.
D)$267.

Question

Quizplus · Accepted Answer

The interest on the note can be calculated using the formula: Interest = Principal × Rate × Time. Here, Principal = $40,000, Rate = 8% (or 0.08 as a decimal), and Time = 120/360 (since the interest rate is annual and there are 360 days in the year for this calculation). So, Interest = $40,000 × 0.08 × (120/360) = $1,066.67, which rounds to $1,067.

The Interest on a $40,000 Face Value, 120-Day Note That