A company borrows $ 100,000 on November 1st, 2039. The interest percentage is 4% annually, with interest and installment payments on the first of February, June and October of each year. What is the interest expense for January 2040?
A) $ 111.11
B) $ 333.33
C) $ 1,333

Question

Quizplus · Accepted Answer

The interest expense for January 2040 is calculated based on the annual interest rate of 4% applied to the principal amount of $100,000. Since interest is accrued monthly, we calculate the monthly interest by dividing the annual interest by 12. Therefore, for one month, the interest expense is $100,000 * 4% / 12 = $333.33.

A Company Borrows $ 100,000 on November 1st, 2039