A company receives a 10%,90-day note for $1,500.The total interest due upon the maturity date is:
A)$37.50.
B)$150.00.
C)$75.00.
D)$50.00.
E)$87.50.

Question

Quizplus · Accepted Answer

The interest on a note is calculated using the formula: Interest = Principal x Rate x Time. Here, the principal is $1,500, the rate is 10% (or 0.10), and the time is 90 days (or 90/360 of a year, assuming a 360-day year for simplicity). Thus, Interest = $1,500 x 0.10 x (90/360) = $37.50.

A Company Receives a 10%,90-Day Note for $1,500