A business accepts a 12 percent,$38,000 note due in three years.Assuming simple interest,how much will the business receive when the note falls due?
A) $42,560
B) $51,680
C) $47,120
D) $38,000

Question

Quizplus · Accepted Answer

To calculate the amount the business will receive when the note falls due, we need to use the simple interest formula:

Interest = Principal x Rate x Time

Where:
Principal = $38,000
Rate = 12% = 0.12
Time = 3 years

So, the interest on the note is:

Interest = $38,000 x 0.12 x 3 = $13,680

Therefore, the total amount the business will receive when the note falls due is:

Total amount = Principal + Interest
Total amount = $38,000 + $13,680 = $51,680

Hence, the best choice is B.

A Business Accepts a 12 Percent,$38,000 Note Due in Three