A company receives a note payable for $5,000 at 10% for 50 days. How much interest (to the nearest cent) will the customer owe?

Question

Quizplus · Accepted Answer

To calculate the interest owed, we use the formula: 
Interest = Principal x Rate x Time

The principal in this case is $5,000, the rate is 10% (or 0.1 as a decimal), and the time is 50 days divided by 365 (to get the fraction of a year).

So: 
Interest = $5,000 x 0.1 x (50/365) 
Interest = $68.49

Therefore, the customer will owe $68.49 in interest. The correct answer is C.

A Company Receives a Note Payable for $5,000 at 10