Interest on a $12,000 note at 6% for 4 months is $240.

Question

Quizplus · Accepted Answer

The formula for calculating simple interest is:
Interest = (Principle × Rate × Time) / 100
Here,
Principle = $12,000,
Rate = 6% per annum, and
Time = 4 months
We need to convert the rate and time into the same unit before applying the formula.
Rate for 4 months = (6/12) × 4 = 2%
Now, applying the formula, we get:
Interest = (12,000 × 2 × 4) / 100 = $960
Hence, the given statement is false. The interest on a $12,000 note at 6% for 4 months is $960, not $240.

Interest on a $12,000 Note at 6% for 4 Months