On the maturity date of a $5,000,3-month,10% note,the borrower sends a check that includes the principal and all of the interest due on the note.What is the amount of the borrower's check?
A) $5,125
B) $5,500
C) $6,500
D) $5,000

Question

Quizplus · Accepted Answer

The formula to calculate simple interest is:

Simple Interest = Principal x Rate x Time

Where:
- Principal = $5,000 (the original amount borrowed)
- Rate = 10% (or 0.10 in decimal form, which represents the interest rate per period)
- Time = 3/12 = 0.25 (since the note is for 3 months, and we need to express it in years to match the interest rate)

So, the total amount of interest due on the note is:

Interest = $5,000 x 0.10 x 0.25 = $125

Therefore, the total amount the borrower needs to pay on the maturity date is:

Total = Principal + Interest = $5,000 + $125 = $5,125

So, the best choice is A) $5,125.

On the Maturity Date of a $5,000,3-Month,10% Note,the Borrower Sends